We believe the roller-coaster ride in February marked the bottom for North American equities in 2016 and we expect that the S&P 500 will make new highs by year-end. Valuations in the financial services sector (both in the US and Canada) are at the most attractive levels since mid-2011 and we took advantage of the correction to add new positions to the AFINA Affinity Fund LP (the “Fund”). The top performing companies in the Fund during February were Alaska Air Group, Cummins, Best Buy, Michael Kors and Home Capital Group.
A summary of performance is as follows:
- The AFINA Affinity Fund was up +4.5% in February. The Fund was up a further +7.5% in the first week of March. At the end of February, financials represented the largest sector weighting at 50.2%, followed by consumer/health care (36.9%), while the dividend yield of the AFINA Affinity Fund was 4.77%.
- The AFINA Optima10 was down 4.7% in February. While the ten positions in the Optima10 lagged the solid performance of the AFINA Affinity Fund, the Optima10 was up +6.8% in the first week of March. The Optima10 currently has its largest weighting in financials (50%) and technology (20%). The dividend yield at month-end in the AFINA Optima10 was 4.14%.
As of February 29, 2016. All figures are net of fees and other expenses. Past performance is not indicative of future results. Refer to afinacapital.com/legal/ for full details and disclosures.
(1) The AFINA Affinity Fund LP fully hedges its US dollar exposure. Accordingly, the AFINA Affinity Fund LP benchmark represents the 50% weighting of the S&P 500 Total Return Index in US dollars and a 50% weighting of the S&P/TSX Composite Total Return Index in Canadian dollars.
(2) The AFINA Optima10 Managed Account does not hedge its US dollar exposure. Accordingly, the AFINA Optima10 benchmark represents the 50% weighting of the S&P 500 Total Return Index in Canadian dollars and a 50% weighting of the S&P/TSX Composite Total Return Index in Canadian dollars.