Purpose Premium Yield Fund July 2016 Commentary

Fund Highlights

  • The Fund was up for the month of July as the S&P 500 set new all-time highs pushing written options further out of the money and expiring worthless.
  • The Fund did not get put into any written option positions in July as the markets trended higher.
  • The Fund got called partially out of two securities that it had been put into recently, GoodYear Tire & Rubber and American Airlines Group resulting in a positive contribution to Fund’s return.
  • Currently the Fund is long 5 equity positions with covered calls written on them and 2 very small positions in GAP and Jabil Circuit.

Market Commentary
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.

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