Wednesday June 15th, 2016
- Positive for the month, the Fund had mixed asset class performance with the equity sleeve providing positive returns as commodities and currencies were both negative.
- Equities were positive due to non-hedged exposure to U.S. Dollar. The Fund held ~34% weight in U.S. equities while the loonie weakened ~4% against the greenback, contributing to Fund returns.
- Long commodity positions were accretive while short commodity positions detracted from Fund performance with crude oil continuing to climb in May.
- Currency positions had mixed returns with short positions performing well and long positions detracting from performance. The short position in Swiss Franc performed particularly well following the monthly currency rebalance on May 13th.
- The Fund replaced 2 U.S. equities during May’s monthly rebalance and balanced 5 commodity long and short positions.
Markets ended higher this month on the back of general positive sentiment. Despite numerous macro overhangs, such as possible Fed rate hikes, a weaker yuan and an impending Brexit vote markets continued to climb the wall of worry. US data was better than expected across manufacturing, retail sales and jobs which bolstered calls for a rate hike by July. Canadian GDP and trade data were worse than expected, with the negative effects of the Alberta fires yet to filter into the data. The divergent economic pictures caused the loonie to sell off 4% on the month. Commodities continued to grind higher with crude finding comfort near $50. Investment grade credit and high yield remained in the sweet spot for investors wanting to own risk while also earning an attractive yield.