Monday December 8th, 2014
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 positive in November. The best performing sectors were financials, staples and materials, while energy and industrials were negative. Real assets were all down led by the decline in crude and metals. The bond allocation was positive as corporate and government bonds rallied higher.
The Fund completed its quarterly rebalance adding BCE, Boardwalk Real Estate, Baytex Energy, Bombardier, Can Real Estate and Dream Global, while removing New Gold, Pacific Rubiales Energy, Taubman Centers and Yamana Gold. The Fund decreased its allocation to investment grade corporates from 24% to 19% of NAV, and increased its allocation to high yield from 24% 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.
Stocks moved higher this month. In the U.S., generally strong data continued to support a positive economic outlook for 2015, and widen the economic gap between the U.S. and other developed countries. Conversely, Japan and Europe saw weakening economic data which prompted the BOJ and ECB towards even more aggressive stimulus measures in order to fend off deflationary pressures. In addition, the Bank of China unexpectedly cut rates to improve liquidity sending global stocks higher. Commodities were under pressure all month highlighted by an 18% plunge in crude prices. The end of month OPEC meeting was pointed to as a potential catalyst for stemming the fall in prices; however OPEC kept its production ceiling unchanged escalating its price war with other oil producing nations. The U.S. dollar pushed higher this month in particular against the Japanese Yen and currencies from commodity exporting nations. The loonie sold off in tandem with oil prices as USD/CAD closed at the year highs above 1.1400.