Purpose US Dividend Fund January Commentary

Fund Highlights

  • Dividend yielding securities provided some protection in the face of heavily negative North American equity markets. PUD ended negative but performed relatively well compared to the broad market as the S&P 500 index was down -4.96% for the month.
  • Defensive sectors continued their upwards trajectory and utilities was the only positively performing sector for the Fund.
  • The Fund continues to find high yields relative to the index at lower costs, with a P/E ratio of 13x and a 5-year dividend growth rate above 11%
  • 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
2016 had a tumultuous start as markets sold off in one of the worst January performances on record. China was a catalyst as markets became unnerved by the rapid devaluation of the yuan which potentially signalled a slowdown in world’s growth engine. Oil sold off to new cycle lows touching $26 which put further pressure on commodity producing nations and exacerbated concerns of global deflation. After the Fed move in December, the market digested the prospect of another series of hikes which led to further uncertainty. Safe haven assets saw inflows as US 10yr yields sank below 2% and gold rallied 5%.

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