Purpose Multi-Strategy Market Neutral Fund April 2016 Commentary

Fund Highlights

  • Negative for the month, the Fund had mixed performance with the currency sleeve being accretive to the Fund and equities and commodities detracting from Fund performance.
  • Long currencies was the best performing sleeve with the Canadian dollar appreciating against a broad basket of currencies on rebounding energy and commodity prices.
  • Equities were largely negative due to non-hedged exposure to the U.S. Dollar. The Fund held ~34% weight in U.S. equities while the loonie gained ~3% against the greenback, diminishing equity returns.
  • The short commodity sleeve was the worst performer as short position in energy commodities hurt the Fund as crude rallied ~20% in April.
  • The Fund replaced three U.S. and six international equities via the monthly rebalance, reduced commodity positions and replaced one currency position.

Market Commentary
Global markets grinded higher in April with Canadian and European equities outperforming the US. Although the IMF warned of further downside risks to growth, global economic data was largely positive this month spurring hopes for reflation. Manufacturing was stronger than expected while US payroll numbers continued to see strength. Canada surprised to the topside as retail sales and GDP figures came in better than expected. There was considerable focus on the energy meeting at Doha, however, no substantial agreement was reached on production cuts. Nonetheless, crude managed to rally almost 20% on lower inventories and a better growth outlook. Commodity cyclical and EM currencies saw significant strength vs the US dollar. The loonie rallied over 3.5% as the prospect of another BOC rate cut seeming to fade. The strength in the yen was a major focus signifying that the BOJ may have reached the limits of its monetary policy. Bonds in the US and Canada sold off from the highs, while corporate credit continued to tighten.

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