Purpose Monthly Income Fund December Commentary

Fund Commentary

The Fund has an income allocation to bonds and high-dividend equities, and has a real asset allocation for purchasing power protection.

The Fund was negative in December. The best performing sectors were utilities, energy and materials while financials, telcoms and industrials were the worst. Real assets were down led by the decline in oil, however metals and grains positions were slightly positive. Fixed income positions were negative, driven by high yield, while corporate and government bonds were positive.

The Fund decreased its allocation to high yield from 28% to 18%, and increased its allocation to investment grade corporates from 19% to 29% of the Fund’s NAV.

The Fund continued to hedge its USD currency exposure, maintaining a net USD exposure of approximately 10% of the Fund’s NAV.

Market Commentary

Markets were volatile into the end of the year. Weak economic data out of Japan, China and Europe dampened the global growth outlook, while heavy selling across Russian equities and the ruble dragged on emerging markets that was reminiscent of 1998. Stock indices fell early in the month as heavy selling across the energy sector and general risk reduction weighed on the broader market. However, the U.S. was the positive global influence as strong jobs and GDP numbers coupled with accommodative language from the Fed helped stem the decline and propel a recovery rally into Christmas.

Commodities saw general weakness into year end with most of the focus still on crude prices which tumbled an additional 19%. OPEC indifference continued to sway markets as the Saudis discounted crude prices for Asian customers and forecasted demand down into 2015.

The U.S. dollar closed out the year at the highs with the Fed on a course to hike rates in 2015. EUR fell to new lows on the year with many expecting the ECB to conduct further quantitative easing in early 2015. Emerging market and commodity based currencies saw weakness throughout December. CAD was no exception closing the year above 1.1600.

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