Purpose Multi-Strategy Market Neutral Fund December Commentary

Purpose Multi-Strategy Market Neutral Fund December Commentary

Fund Highlights

  • The Fund benefitted from its diversified exposure with international economics trending helping the currency and commodity sleeve to profit.
  • International equity exposure helped the Fund profit while U.S. names caused a drag on returns. The value tilt of PMM’s equities remained out of favour during the month.
  • The currency book ended positive for the month as the Canadian dollar continued its decline on weaker crude oil prices and no signs of production cut-back from OPEC.
  • Commodities were the largest positive contributor to Fund returns. Energy shorts remained profitable through the month as crude oil tumbled a further -11% in December.
  • The Fund replaced six U.S. equity positions in December along with two currencies. The Fund also removed a long wheat position, evening the total long and short commodity positions at five.

Market Commentary

Stocks and bonds ended lower in December to close out generally choppy performance for 2015.[Add sentence or 2 on 2015 market performance for U.S. equities, Canadian Equities, MSCI EAFE (local currency) and Canadian Fixed Income and oil and gold.] The main focus this month was on the FOMC decision. After another solid U.S. job number gave the green light for “lift off” the Fed delivered by hiking rates by 0.25% for the first time in a decade. The Fed went on to assuage concerns over the pace of future hikes by promising that the path would be gradual and data consistent. In Europe, Draghi underwhelmed on the extent of rate cuts and further QE measures which sparked a sharp rally in the Euro and European yields. In Asia, Chinese growth concerns resurfaced as the central bank allowed the yuan to weaken to its lowest level in over 4 years. In commodities, oil sold off further to new lows on the year after OPEC maintained its current production rate which disappointed potential expectations for a potential supply cut. Canada traded poorly on the back of this as the loonie and the S&P/TSX both sold off to end the year.

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