Purpose Tactical Investment Grade Bond Fund April 2016 Commentary

Fund Highlights

  • The Fund was positive in April with corporate bonds rallying on tightening credit spreads in North America as macro-economic signals came in largely positive in the month.
  • High yield was the best performing sleeve and Canadian bond selection generally outperformed U.S. bond selection.
  • The interest rate hedge on Canadian and U.S. portions of the portfolio were both accretive to the Fund.

Market Commentary
Global markets grinded higher in April with Canadian and European equities outperforming the US. Although the IMF warned of further downside risks to growth, global economic data was largely positive this month spurring hopes for reflation. Manufacturing was stronger than expected while US payroll numbers continued to see strength. Canada surprised to the topside as retail sales and GDP figures came in better than expected. There was considerable focus on the energy meeting at Doha, however, no substantial agreement was reached on production cuts. Nonetheless, crude managed to rally almost 20% on lower inventories and a better growth outlook. Commodity cyclical and EM currencies saw significant strength vs the US dollar. The loonie rallied over 3.5% as the prospect of another BOC rate cut seeming to fade. The strength in the yen was a major focus signifying that the BOJ may have reached the limits of its monetary policy. Bonds in the US and Canada sold off from the highs, while corporate credit continued to tighten.

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