Friday August 19th, 2016
- Positive for the month, the Fund captured upside on the equity sleeve with the recovery of deep value holdings. The currency and commodities sleeve was negative for the month.
- Equities was the big gainer this month with deep value holdings correcting valuations as the S&P500 hit new all-time highs. International equities were also positive contributors to Fund return with international markets recovering following the Brexit fallout.
- Currency sleeve was negative in July with the Canadian dollar sliding on crude weakness and the correction of emerging market currencies as European markets found upward momentum.
- Commodities were the worst performing sleeve in the Fund even as energy shorts were accretive to Fund performance. Falling prices of long agricultural commodity positions in the face of easing supply concerns also hurt Fund performance.
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.