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The High Income Fund returned 0.38% in July, with most stock markets down and bonds advancing in a flight-to-safety move. Market volatility spiked as investors reacted to the escalating Israeli-Gaza conflict and the ongoing Russian-Ukrainian crisis with its potential to negatively impact the struggling Eurozone economy. Investors also reacted to the defaults of Argentina and Portuguese Banco Espírito Santo.
The Fund’s performance moderately lagged its benchmark. The results reflected a beat in asset mix with an overweight position in Canadian Equities and underweight in Foreign Equities and Bonds. Foreign equity security selection was strong, while Canadian security selection was impacted by the under-performance of the Energy Sector which saw some profit-taking after leading in the first half of the year. In Bonds, the underperformance was immaterial as corporate security selection and an overweight in municipals substantially offset the drag from cash and the impact of slightly wider corporate yield spreads. (more…)