Purpose US Dividend Fund June Commentary

Fund Highlights

  • The Fund was negative in June as dividend equities underperformed the broad U.S. market and U.S. bond yields continued up higher in anticipation of U.S. Fed interest rate hike.
  • Markets ended lower this month as geopolitical uncertainty weighed on risky assets. U.S. jobs data came in stronger than expected which put the Fed on a path to raise rates later this year. Despite dovish FOMC comments, U.S. bond yields continued higher causing volatility across interest sensitive sectors and dividend paying names.
  • Interest rate sensitive names across utilities and real estate were the worst performers as U.S. treasury yields rallied higher. Financials was the only positive performing sector.
  • With respect to the currency hedged shares, the Fund continued to hedge its U.S. dollar currency exposure maintaining a net U.S. dollar exposure at approximately 10% of the Fund’s NAV.

Market Commentary

Markets ended lower this month as global geopolitical risks weighed on risky assets. Greece was an overhang on the Eurozone as probability rose that it would default on IMF loans due at the end of the month. The Greek government also shut down local banks and called a surprise referendum which heightened uncertainty. In the U.S. , jobs data came in stronger than expected which put the U.S. Fed on a path to raise interest rates later this year. However, despite the dovish FOMC comments U.S. bond yields continued higher causing volatility across interest rate sensitive assets. In Canada, economic data was mixed as better than expected jobs numbers were offset by weaker GDP and retail sales. This soft data renewed concerns of recession and bolstered calls for further rate cuts from the Bank of Canada.
Commodities were mixed. Energy drifted lower led by Brent oil and heating oil. Grains saw a large move higher as wet weather conditions and bullish USDA reports drove short covering across the complex.
Currency markets were choppy this month as the U.S. dollar took a pause in its upward trajectory ending lower this month. Euro had large swings driven by the uncertainty in Greece, while the CAD dollar closed slightly higher.

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