Purpose US Dividend Fund April 2016 Commentary

Fund Highlights

  • U.S. dividend yielders performed positively in April as U.S. equity markets maintained defensive posture.
  • Energy names were the biggest contributor to Fund performance as energy prices rallied 20% during the month on stronger economic data and lower inventory levels.
  • The strategy continues to outperform the benchmark indices without trading at a premium (forward P/E of 17.2x). Dividend yielders have been a strong story in volatile financial markets.
  • Security selection in technology was a major contributor to Fund performance showing significant outperformance.
  • With respect to the currency-hedged shares, the Fund continued to hedge U.S. dollar currency exposure maintaining a net U.S. dollar exposure of approximately 7% of the Fund’s NAV.

Market Commentary
Global markets grinded higher in April with Canadian and European equities outperforming the US. Although the IMF warned of further downside risks to growth, global economic data was largely positive this month spurring hopes for reflation. Manufacturing was stronger than expected while US payroll numbers continued to see strength. Canada surprised to the topside as retail sales and GDP figures came in better than expected. There was considerable focus on the energy meeting at Doha, however, no substantial agreement was reached on production cuts. Nonetheless, crude managed to rally almost 20% on lower inventories and a better growth outlook. Commodity cyclical and EM currencies saw significant strength vs the US dollar. The loonie rallied over 3.5% as the prospect of another BOC rate cut seeming to fade. The strength in the yen was a major focus signifying that the BOJ may have reached the limits of its monetary policy. Bonds in the US and Canada sold off from the highs, while corporate credit continued to tighten.

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