Global Tactical Income Fund Commentary
Portfolio Sub-Advisor: Aston Hill Investments Inc.
Manager Commentary - April, 2012
April started off with a sell-off in equities, pushing down the
S&P 500 Index and the S&P/TSX Composite Index with both
selling-off over 4% early in the month. Due to strong Q1
earnings, equity markets rallied, regaining some of the losses and
closing the month out with both indexes down only 0.6%. The
Merrill Lynch U.S. High Yield Cash Pay Index returned 1.03%.
April was aided by a reversal in the rates sell-off in March.
The trend of refinancing continued throughout the month, and
although the asset class suffered the first outflow since November,
net flows for the month ended positive. With fears continuing to be
centered on Europe, the global macro recovery, and China GDP
slowdown, commodity equities have led the pressure to the downside.
While U.S. economic growth has proven resilient so far, it remains
constrained by policy uncertainty and households continuing to
deleverage their balance sheets. Comments out of the FOMC
meeting at the end of the month lowered the probability of
additional stimulus in June when "Operation Twist" ends, and the
focus going forward will be on the upcoming U.S. presidential
elections and the debate about domestic deficits.
At the end of the month, the IA Clarington Global Tactical
Income Fund had cash positions of 17%, fixed income weightings of
41%, and equity weightings of 42%.
New positions that were added in the IA Clarington Global
Tactical Income Fund were New Gold 7% 2020, Sitel 11% 2017 and
Lucent Tech Cap 7.75% 2017 on the fixed income side and Cinemark
and Dollar General on the equity side. MEG Energy 6.5% 2021
and Trident Exploration 8.25% 2018 are bonds that were sold out of
the Fund. As with the IA Clarington Tactical Income Fund, the
Chaparral Energy 8.875% 2017 bonds were called and we wrote calls
on a number of different core positions that we felt had limited
upside to collect additional income.