Wednesday June 15th, 2016
- Positive for the month but trailing benchmarks, the Fund continues to perform per strategy expectations with tensions in Europe on Brexit, weakness in Chinese growth, and Australian recovery on commodity demand growth.
- Britain (FTSE100 -0.18%) and Asia Developed (Hang Seng -1.20%) were the only declining regional markets in May.
- After outperforming in April, materials was the worst performer in May, relinquishing accumulated returns. Financials were the best performing on positive global macro-economic data.
- The Fund remains highly defensive in posture with high hedges enacted in Europe and Japan whereas Britain and Australia are the regions most aggressively exposed to financial markets.
Markets ended higher this month on the back of general positive sentiment. Despite numerous macro overhangs, such as possible Fed rate hikes, a weaker yuan and an impending Brexit vote markets continued to climb the wall of worry. US data was better than expected across manufacturing, retail sales and jobs which bolstered calls for a rate hike by July. Canadian GDP and trade data were worse than expected, with the negative effects of the Alberta fires yet to filter into the data. The divergent economic pictures caused the loonie to sell off 4% on the month. Commodities continued to grind higher with crude finding comfort near $50. Investment grade credit and high yield remained in the sweet spot for investors wanting to own risk while also earning an attractive yield.