Purpose Tactical Hedged Equity Fund July 2016 Commentary

Fund Highlights

  • U.S. equities rallied and S&P 500 reached new all-time highs in July and although value stocks underperformed the broad index in July, stock selection for the Fund performed well, with returns of 5.6% in long positions compared to 3.7% for the index.
  • Consumer discretionary was the best performing sector this month and the only negative net contribution was attributed to energy as crude futures sank 14% during the month.
  • Deep value valuations corrected higher as investors put money to work as rate hike expectations continue to stay low in the face of slowing international markets.
  • Net equity exposure for the Fund was largely maintained through the month and the short index futures was a detractor from Fund performance as the S&P500 rallied higher.

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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