Purpose Tactical Hedged Equity Fund October Commentary

Market Commentary

Markets covered wide ranges in October, driven by a high level of activity from central banks globally. Investors have been seeking yield after the September FOMC announcement when the Federal Reserve did not begin tapering their bond purchasing program. The primary events in October which drove equity markets were the appointment of Janet Yellen as Ben Bernanke’s successor, the government shutdown, and the potential of the U.S. defaulting on its debt. All these events were resolved, with the government shutdown ending, a delay in decisions regarding the debt ceiling to early next year and a general sigh of relief as markets assessed that that Yellen would be a dovish central banker. This motivated yield seeking investors to rally equities and high yield debt. We see this continuing into Yellen’s Senate confirmation in November.

Fund Commentary

The Purpose Tactical Hedged Equity Fund’s performance continued to benefit from the rally in the U.S. equity market. Net exposure is still near maximum levels and relatively unchanged from September in order to participate in the equity market uptrend. The top performing sectors were Energy, Telecom and Health Care as investors returned to the equity markets in full force. The lagging sectors this month were Industrials, Materials and Technology.

The Fund benefitted from M&A transactions as Jos. A. Bank’s bid for Men`s Wearhouse which was our top performing stock, up 30%. The other top performers were Delek and Valero. The three primary laggards were Dana Holdings, Pilgrim’s Pride, and Sanmina.

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