Purpose Diversified Real Asset Fund September Commentary

Fund Commentary

The Fund holds a risk-balanced portfolio diversified across agriculture, energy, base metals, precious metals, and real estate.
The Fund was negative during the month of September as physical commodities and equities with cyclical commodity exposure saw significant selling pressure. The worst performers were the Fund’s exposure to materials, energy and real estate stocks while consumer staples was our best performer. Commodity positions all ended lower as supply overhang, weakening global demand and a strong dollar were all headwinds for performance this month.
All commodity positions were down this month. The worst performer was corn which sold off after a bearish WADE report that had higher than expected crop yield revisions.

Market Commentary

Geopolitical concerns in Russia/Ukraine and the Middle East continued to overhang markets this month. Pro-democracy protests in Hong Kong and an independence referendum in Scotland also contributed to the general sense of unease. Economic data pointed towards slowdown in China, and European data was also sluggish. In response, the PBOC added liquidity to support China’s 5 largest banks, while the ECB made a surprise rate cut and added almost $1tr in stimulus in an attempt to fend off deflationary pressures. Canadian markets fell on weakness experienced across cyclical commodity sectors. The US continued to diverge from other developed nations and posted a strong Q2 GDP, as well as improving economic activity. Speculation over the path of future US interest rate hikes continued to weigh on investors’ minds.

Commodities experienced heavy selling this month as the S&P GSCI closed down 6%. The combination of supply overhang, weak Chinese demand and a strong US dollar saw negative performance across grains, metals and energy.

The US dollar had another month of strong gains. The diverging interest rate and growth outlook between the US and other developed countries saw the US dollar appreciate against every G10 currency. The loonie fell 3% this month to 1.1200.

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