Friday August 19th, 2016
- The Fund was positive in July as international markets staged a recovery following a sell-off from uncertainty around Brexit.
- Japan and Europe were the best performing regions on an equity only basis but some of these gains were offset by equity futures hedges implemented in the regions. All regions remained accretive to Fund performance.
- Telecom was the only sector to detract from Fund performance whereas cyclicals were the best performers.
- The Fund has very high net market exposure in Britain and Europe but remains highly hedged in Japan.
- The Fund replaced five securities during the month, one in each region other than Switzerland.
July saw a continuation of a post Brexit relief rally. Although the outcome for European growth was likely long term negative, short term flows outweighed those concerns as investors needed to put money to work. Equities rallied higher with the S&P making new all -time highs, while European markets recovered higher. With central banks keeping rates at exceptionally low levels, the hunt for yield was heightened as investment grade and high yield credit rallied. Commodities experienced weakness led by the energy complex. Crude prices sank over $10 on concerns of a supply glut. As a result, commodity cyclical currencies also saw weakness. Slack Canadian economic data and worries over a housing bubble were additional headwinds for the loonie this month.