Friday August 19th, 2016
- July saw a continuation of a post Brexit relief rally and an intensification of the hunt for yield with the S&P500 making new all-time highs. Dividend yielders continued their strong returns in the environment with safety and income the central themes of investment in July.
- Holdings in cyclical sectors performed the best and the only downside came from utilities and energy sectors as crude sank 14% during the month on higher U.S. inventory numbers.
- The Fund continues to find excess dividend yield for most securities while maintaining an earnings yield well below the broad index (S&P 500 P/E = 18x and PUD P/E = 15.5x)
July saw a continuation of a post Brexit relief rally. Although the outcome for European growth was likely long term negative, short term flows outweighed those concerns as investors needed to put money to work. Equities rallied higher with the S&P making new all -time highs, while European markets recovered higher. With central banks keeping rates at exceptionally low levels, the hunt for yield was heightened as investment grade and high yield credit rallied. Commodities experienced weakness led by the energy complex. Crude prices sank over $10 on concerns of a supply glut. As a result, commodity cyclical currencies also saw weakness. Slack Canadian economic data and worries over a housing bubble were additional headwinds for the loonie this month.