Purpose Total Return Bond Fund December Commentary

Fund Commentary

The Fund tactically allocates across the credit spectrum including high yield, investment grade, government bonds, and cash. The Fund was negative this month driven by weakness in high yield bonds. Energy companies are a relatively large constituent of the high yield issuance market, and their ability to meet future debt obligations has become a major concern in light of the falling price of oil.

Corporate and government bond positions were positive this month.
This month the Fund decreased its allocation to high yield from 53% to 35% and increased its allocation to corporate bonds from 39% to 58%.

Market Commentary

Markets were volatile into the end of the year. Weak economic data out of Japan, China and Europe dampened the global growth outlook, while heavy selling across Russian equities and the ruble dragged on emerging markets that was reminiscent of 1998. Stock indices fell early in the month as heavy selling across the energy sector and general risk reduction weighed on the broader market. However, the U.S. was the positive global influence as strong jobs and GDP numbers coupled with accommodative language from the Fed helped stem the decline and propel a recovery rally into Christmas.

Commodities saw general weakness into year end with most of the focus still on crude prices which tumbled an additional 19%. OPEC indifference continued to sway markets as the Saudis discounted crude prices for Asian customers and forecasted demand down into 2015.

The U.S. dollar closed out the year at the highs with the Fed on a course to hike rates in 2015. EUR fell to new lows on the year with many expecting the ECB to conduct further quantitative easing in early 2015. Emerging market and commodity based currencies saw weakness throughout December. CAD was no exception closing the year above 1.1600.

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