Purpose Monthly Income Fund February Commentary

Market Commentary

Global stock markets shrugged off their January losses and rallied back in February as investors reversed their aversion to risk assets and poured money back into equity markets across the globe. The geopolitical trouble in Ukraine impacted agriculture and energy exports from the region raising anxiety and world commodity prices. Natural gas was especially volatile as the cold snap continued into February, depleting the already low reserves in the U.S. and Canada. Physical gold and equities continued their 2014 rally and were top performing asset classes. The ECB echoed the U.S. Fed’s statements about continuing with their policy of low rates to avoid a weak inflationary environment. Currencies saw increased volatility, with the Canadian Dollar touching 1.12 relative to the U.S. Dollar towards the end of January and then settling back in at 1.11 for February.

Fund Commentary

The Fund saw positive performance for the month of February from its exposure to real assets, bonds and dividend paying equities which all generated positive returns.

The best performing sectors for income equities were consumer staples, energy and financials, while the worst performing sectors were telecommunications, consumer discretionary and information technology. Among real assets, the best sectors were precious metals and real estate, while the worst sectors were agriculture and energy. The bond allocation again benefitted from the increasing appetite for yield as corporate credit rallied in February. The Fund’s largest exposure is to corporate credit, with a focus on high yield which was also the Fund’s best performing allocation.
The Fund completed a monthly rebalance maintaining approximately 33% of its net assets in high yield debt, and increasing its holdings in government debt. The Fund rebalanced its income equities portfolio, adding BCE, Canadian Oil Sands, Duke Energy, Kraft Foods, Macerich Co., Mattel, Meadwestvaco, Philip Morris, Potash, PPL Corp, RioCan REIT, Rayonier, AT&T, Teck Resources and Verizon and rotating out Boardwalk REIT, Bonavista Energy, Brookfield Office Properties, Campbell Soup, Cominar REIT, Dundee REIT, Great Plains Energy, Husky Energy, IGM Financial, Intel, Merck, Jean Coutu, Can REIT, TransAlta and Thomson Reuters.

The Fund continues to hedge its U.S. Dollar currency exposure, maintaining a net U.S. Dollar exposure of approximately 10% of the Fund’s net assets.

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