Purpose Tactical Investment Grade Bond Fund March Commentary

Fund Highlights

  • The Fund was positive in March with corporate bonds rallying on tightening credit spreads in North America based on an unexpected dovish turn by the Federal Reserve with respect to further tightening of the U.S. economy.
  • All bond sleeves were positive in March with Canadian corporate bonds providing the best returns, followed closely by U.S. corporate bonds and U.S. high yield.
  • Financials and Energy were the best performing sectors for credit spreads. No sectors in the portfolio detracted from Fund performance.
  • Interest rate hedge position applied on U.S. portion of the portfolio was accretive to the Fund as the U.S. 10Yr rate declined 39bps for the month.

Market Commentary
Markets retraced higher in March with the S&P recovering almost all its year to date losses. Oil bounced off the lows in anticipation of a meeting between OPEC and non-OPEC nations to discuss production freezes. US employment numbers continued to see strength which bolstered the argument for further Fed hikes this year, however Yellen surprised the market taking an abrupt dovish turn while citing recent financial developments in her reluctance to tighten further. As a result, the US dollar sold off broadly, credit tightened and risk assets rallied. In Canada, a poor jobs number was offset by an upward surprises to retail sales and GDP. The government also announced a budget deficit plan which would include a large infrastructure spending program aimed at stimulating more growth.

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