Purpose Tactical Investment Grade Bond Fund December Commentary

Purpose Tactical Investment Grade Bond Fund December Commentary

Fund Highlights

  • The Fund was flat for the month of December as gains in financials were offset by falling prices for the high-yield sector to which the Fund had an exposure of 9.94% at month end.
  • Financial, staples and technology bonds were the best performing sectors while energy and high yield were the worst.
  • The Fund expanded to 18 new investment grade bond names as total AUM swelled to $43m.
  • The Fund had a duration hedge on 10% of NAV through short exposure on 10-year CAD government bond futures, and overwrote calls on 10 Year U.S. Treasury Note Futures approximately 12% of NAV.

Market Commentary

Stocks and bonds ended lower in December to close out generally choppy performance for 2015.[Add sentence or 2 on 2015 market performance for U.S. equities, Canadian Equities, MSCI EAFE (local currency) and Canadian Fixed Income and oil and gold.] The main focus this month was on the FOMC decision. After another solid U.S. job number gave the green light for “lift off” the Fed delivered by hiking rates by 0.25% for the first time in a decade. The Fed went on to assuage concerns over the pace of future hikes by promising that the path would be gradual and data consistent. In Europe, Draghi underwhelmed on the extent of rate cuts and further QE measures which sparked a sharp rally in the Euro and European yields. In Asia, Chinese growth concerns resurfaced as the central bank allowed the yuan to weaken to its lowest level in over 4 years. In commodities, oil sold off further to new lows on the year after OPEC maintained its current production rate which disappointed potential expectations for a potential supply cut. Canada traded poorly on the back of this as the loonie and the S&P/TSX both sold off to end the year.

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