Purpose Tactical Hedged Equity Fund April Commentary

Market Commentary

Price action across most assets was generally choppy and range bound, which resulted in volatility falling across the board. Geopolitical concerns in the Ukraine continued to weigh on risk sentiment causing a dip early in the month. However, markets shrugged off these concerns in the belief that prolonged tensions between Russia and the G7 would not escalate. The U.S. saw better ISM and PMI data supporting an outlook for accelerating growth. In addition, the Federal Reserve Board (Fed) and European Central Bank (ECB) both maintained a dovish outlook, with the Fed downplaying a specific path for tightening and promising that it would keep rates near zero for a “considerable time.” China data was still weak and served as an overhang on the EM complex. In commodities, crude and wheat prices rallied as Ukraine tensions escalated. Gold and silver initially saw a safe haven bid, but they eventually sold off on declining Chinese demand. Despite continued dovish comments from the Bank of Canada (BOC), the Canadian dollar strengthened last month on the back of better than expected economic data and a generally weaker U.S. dollar.

Fund Commentary

The Fund gained in March as value equities recovered during the month even as equity markets traded sideways. The best performing sectors were energy, consumer staples, health care and information technology, while the worst performing sectors were consumer discretionary, materials, telecommunications and industrials.
The best performing stocks were Pilgrim’s Pride, SanDisk Corp and CVR Energy, while the worst performing stocks were American Eagle Outfitters, Anixter International and Exelis Inc.
Pilgrim’s Pride outperformed on strong earnings from improving US margins, and lower expenses. Sandisk was one of the best performing stocks in the Fund as the company was added to the NASD technology dividend index and a positive read on their IP lawsuit against Hynix helped buoyed the stock. CVR Energy benefited from posting Q4 earnings that were far above expectations and riding the market trend of mid-cap energy stocks outperforming their large cap counterparts.
American Eagle was the worst performing position in the portfolio as the company’s Q1 forecast trailed analyst estimates.
The Fund completed a monthly rebalance at the end of March, turning over 11 names in the portfolio. The equities rebalance targeted profit taking and diversification as the Fund added positions in T Avon Products, Bed Bath and Beyond, ConocoPhilips, International Game Technology, KBR, National Oilwell Varco, Philip Morriss, Seagate, Sysco and Tech Data and sold its positions in Archer Daniels, American Eagle Outfitters, Andersons, EMC Corp, Hollyfrontier, Kohls, Sanderson Farms, Superior Energy Services, Verizon Communications and Exelis. The rebalance also increased the sizing of the short futures hedge to approximately 21% of the fund.
The Fund continued to hedge its USD currency exposure maintaining a net USD exposure at approximately 10% of the Fund’s NAV.

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