Purpose International Tactical Hedged Equity Fund June Commentary

Fund Highlights

  • The Fund was negative in June as global markets ended lower this month as geopolitical uncertainty weighed on risky assets. Greece was an overhang on the Eurozone as probability rose that it would default on IMF loans due at the end of the month. The Greek government also shut down local banks and called a surprise referendum which heightened uncertainty. Asian markets were volatile as a frothy Chinese market reversed gains mid-month and fell over 21% from the highs.
  • This month all countries were negative with the U.K contributing the largest losses and Hong Kong having the most relative outperformance. Across sectors, materials, energy and technology were the laggards while financials and telecom holdings saw relative outperformance.
  • This month the Fund increased short index futures hedges in Switzerland, Australia, Europe, and Britain; the fund added new futures hedges in Japan and Hong Kong. Total short equity index hedges amount to 18% of NAV and the Fund’s corresponding net market exposure at month end was 72%.

Market Commentary

Markets ended lower this month as global geopolitical risks weighed on risky assets. Greece was an overhang on the Eurozone as probability rose that it would default on IMF loans due at the end of the month. The Greek government also shut down local banks and called a surprise referendum which heightened uncertainty. In the U.S. , jobs data came in stronger than expected which put the U.S. Fed on a path to raise interest rates later this year. However, despite the dovish FOMC comments U.S. bond yields continued higher causing volatility across interest rate sensitive assets. In Canada, economic data was mixed as better than expected jobs numbers were offset by weaker GDP and retail sales. This soft data renewed concerns of recession and bolstered calls for further rate cuts from the Bank of Canada.
Commodities were mixed. Energy drifted lower led by Brent oil and heating oil. Grains saw a large move higher as wet weather conditions and bullish USDA reports drove short covering across the complex.
Currency markets were choppy this month as the U.S. dollar took a pause in its upward trajectory ending lower this month. Euro had large swings driven by the uncertainty in Greece, while the CAD dollar closed slightly higher.

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