Purpose US Dividend Fund February Commentary

Fund Highlights

  • Dividend yielders continued to outperform the broad market as the market swayed to defensive sectors and the Fund performed well in an overall slow market.allied back with many holdings correcting in excess of +20%. The Fund experienced positive gains in all sleeves other than energy. Metals and commodities were the best performing sleeves this month.
  • Overweight allocation to materials and utilities drove Fund performance as well as good security selection in technology and financials. Security selection in the industrials sector was the only major drag to performance.
  • A scheduled quarterly rebalance was carried out and the Fund replaced 12 securities this month.
  • 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.
  • The non-currency hedged shares faced strong headwinds as the Loonie appreciated ~3% against the U.S. dollar.

Market Commentary
Markets tested lower early in February driven by heightened risk aversion. Risk assets have seen a strong correlation with oil in recent months as WTI sank to multiyear lows. However, as things looked bleakest, sentiment seemed to shift after rumours emerged that the largest oil producing nations were intent on meeting in March to discuss possible production cuts. Crude rallied over 30% off the lows which had a positive transmission effect across equity and high yield markets. Canadian equities outperformed as cyclical sectors saw a sizeable bounce. Talks of increased fiscal stimulus and a waning need for further rate cuts helped the loonie recover over 3%. US GDP and jobs growth was better than expected, and the Fed reiterated its outlook for a gradual liftoff in 2016. Europe still produced sluggish IP and PMI’s, while the threat of a UK Brexit was a further overhang for the Eurozone.

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