Purpose Multi-Strategy Market Neutral Fund September Commentary

Fund Highlights

  • The Fund finished lower in September as equities and currencies ended negative while commodities were positive.
  • Both U.S. and international equities were negative this month but were partially offset by index futures hedges which provided downside protection. Global growth weakness concerns caused energy and materials equities to further decline for the year. The Fund has a highly defensive position in equities with net equity exposure of ~22% at month end, from an equity allocation of ~48% of NAV.
  • In the currency portfolio, the long position in the Brazilian Real was the worst currency performer as deteriorating financial conditions and political uncertainty pushed the currency to new lows. Taiwan Dollar shorts were profitable as the currency experienced its largest quarterly drop since 1997 after reporting weak export data.
  • Commodity gains were driven by shorts in crude oil which declined with the deteriorating outlook for global growth. Sugar shorts were the worst performer as ethanol demand and technical short-covering squeezed prices higher.

Market Commentary

Global markets continued to experience volatility in September with major global equity indices ending lower on the month. China remained in sharp focus as declining manufacturing and worsening economic data stoked further deflationary fears. Over the past year, the Fed has prepared the market for an imminent interest rate hike, however they stood still on rates this month citing global economic and financial developments that put further downward pressure on inflation in the near term. With much uncertainty surrounding the outlook for global growth, risk was pared back notably across cyclical sectors. Commodity prices fell led by energy and metals. In currencies, commodity currencies were broadly sold with the loonie making new lows on the year.

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