Purpose Total Return Bond Fund March Commentary

Fund Highlights

  • The Fund was positive in March with fixed income assets rallying in North America on an unexpected dovish turn by the Federal Reserve with respect to further tightening of the U.S. economy.
  • High yield and investment grade corporate bonds rallied as credit spreads tightened and rate hike expectations softened in March. The Fund further increased allocation to high yield bonds in March bringing the total to 25% of NAV equivalent, up from a low of 15% in February.
  • Government bonds were the only negative performing sleeve of the portfolio and weighting of the sleeve was reduced to 22%, from 31% at the start of the month.
  • Options positioned to capitalize on a high yield rally were accretive to Fund performance.

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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