Purpose International Tactical Hedged Equity Fund February Commentary

Fund Highlights

  • The Fund performed negatively this month as the MSCI EAFE Index was down in excess of -5% over the period due to global growth weakness.
  • All sectors were negative this month with financials and technology being the worst culprits.
  • All geographical zones were negative this month with Europe and Japan being the worst performers in February as the Euro Stoxx 50 declined -3.26% in February and the Nikkei 225 declined -8.5%.
  • The equity futures hedge contirbuted positively for the Fund in all regions other than Britain. The Fund approximately clawed back 30% of losses through its hedge position.
  • The Fund currently maintains almost maximum hedge in all regions other than Europe as momentum and growth continues to trend downwards.

Market Commentary
Markets tested lower early in February driven by heightened risk aversion. Risk assets have seen a strong correlation with oil in recent months as WTI sank to multiyear lows. However, as things looked bleakest, sentiment seemed to shift after rumours emerged that the largest oil producing nations were intent on meeting in March to discuss possible production cuts. Crude rallied over 30% off the lows which had a positive transmission effect across equity and high yield markets. Canadian equities outperformed as cyclical sectors saw a sizeable bounce. Talks of increased fiscal stimulus and a waning need for further rate cuts helped the loonie recover over 3%. US GDP and jobs growth was better than expected, and the Fed reiterated its outlook for a gradual liftoff in 2016. Europe still produced sluggish IP and PMI’s, while the threat of a UK Brexit was a further overhang for the Eurozone.

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