Purpose Monthly Income Fund July 2016 Commentary

Fund Highlights

  • The Fund was positive for the month with all asset sleeves performing positively and contributing to Fund performance as the S&P500 continued to make new all-time highs.
  • Income based products in the fixed income and dividend space appreciated as investors continued their search for yield in the face of loosening monetary policy throughout international markets.
  • Fixed income was the best performing asset sleeve as credit spreads tightened in the high yield and corporate bond space. Low expectations of an interest rate hike by the Federal Reserve this year has led to improved financial outlooks for borrowers.
  • Real assets continued to provide safety to investors whereas international markets recovered as investors entered back into the market following a sharp pull out following Brexit.
  • Put option overwriting was accretive to Fund performance with S&P 500 making new all-time highs.

Market Commentary
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.

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