Purpose Monthly Income Fund September Commentary

Fund Commentary

The Fund has an income allocation to bonds and high-dividend equities, and a real asset allocation for purchasing power protection. The Fund was negative in September as the Fund’s exposure to corporate bonds and commodities ended lower.

The best performing sectors were staples, utilities, and healthcare while energy, materials and financials ended lower. Real assets finished lower with energy and grains facing headwinds this month. The bond allocation was down in September. The Fund’s largest exposure was to high yield, corporate credit saw selling pressure returning to the lows seen in July.

The Fund continued to hedge its USD currency exposure, maintaining a net USD exposure of approximately 10% of the Fund’s NAV.

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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