Purpose Total Return Bond Fund January Commentary

Market Commentary

Global stock markets pulled back sharply after closing out 2013 at the highs, as heightened emerging market volatility triggered a broad sell off across risk assets. Destabilizing events in Turkey and Argentina received the majority of the headlines. Furthermore, weaker Chinese manufacturing data pointing towards a slowdown also fuelled negative sentiment. As a result, foreign investment flows broadly exited the emerging market (EM) space and into safe havens such as bonds and gold. In the U.S., an unexpectedly poor payrolls number was at odds with recent upward trends in economic data. Despite the market turbulence, the Fed tapered an additional $10 billion, signaling that it was staying the course for an eventual exit from its QE program. In Canada, weak employment and trade data suggested that the BOC would maintain a dovish stance going forward.

Fund Commentary

The Fund tactically allocates across the credit spectrum including high yield, investment grade, government bonds, and cash. The Fund delivered positive returns in January from exposure to corporate credit through both high yield and investment grade debt.
With yield being in focus again as the Fed initiates a QE tapering initiative, high yield and corporate debt were both up, driving the Fund’s performance. The Fund completed a monthly rebalance which maintained approximately 66% in high yield debt, increased holdings in investment grade debt to approximately 32% from 30%, and slightly reduced exposure to government debt.

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