I am an accredited or eligible investor as defined in National Instrument 45-106.




Liis Palmer, Cassels Investment Management Inc.

Monthly Pay Fund

Last week the TSX was down 0.8 percent.  WTI oil was down 5.5 percent.  The Marquest Monthly Pay Fund A units closed at $4.03 after the $0.075 monthly distribution ($4.105 before distribution) compared to $4.13 the previous week.  Volatility in the commodity markets is having its effects on the Canadian securities markets.

Significant contributors in the Fund last week were Pulte Homes (up 2.1 percent), Restaurant Brands (up 2.7 percent) and Cameco (up 2.4 percent).  Pulte is a US homebuilder.  May pending home sales numbers in the US continued a steady strengthening trend.

Bank of Nova Scotia (down 2.6 percent), Royal Bank (down 2.0 percent) and TD Bank (down 1.4 percent) were last week’s laggards.  The Canadian banks were the previous week’s significant contributors.

Global Balanced Fund

Last week, the MSCI World Index was down 1.8 percent. The C$ was down 2.0 percent against the US$.  The Marquest Global Balanced Fund A units closed at $18.31 after the $0.09 monthly distribution ($18.40 before distribution) compared with $18.47 the previous week.  The volatility in commodity prices due to market corrections in China and talks with Iran seemed overshadowed by the Greek referendum which kept investors nervous.  The ECB’s readiness to support weakness with Quantitative Easing has muted the response to a No vote.

Significant contributors to performance were Comcast (up 4.0 percent), Disney (up 2.5 percent) and CVS Health (up 1.4 percent).  With increased market uncertainty investors are appreciating Comcast’s high quality assets and stable, growing cash flow in the Cable business.  At the same time, record box office performance from Jurassic World and strong theme park performance support 32 and 20 percent revenue increases in the Filmed Entertainment and Theme Park divisions in the second quarter.

Laggards were Banco Santander (down 4.9 percent), Whirlpool (down 3.3 percent) and Aetna (down 3.2 percent).  Aetna plans to acquire Humana for $37 billion in cash and stock.  The merger will create the second largest managed care organization in the US (after United Health) and the largest Medicare Advantage organization.  The Medicare Advantage business is an important growth driver given the aging US population.  Scale is very important in this industry; the companies will be able to leverage their technology investments and Aetna can diversify its platforms.  The acquisition is neutral to earnings in fiscal 2016 and accretive after that.

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