Purpose Total Return Bond Fund October Commentary

Market Commentary

Markets covered wide ranges in October, driven by a high level of activity from central banks globally. Investors have been seeking yield after the September FOMC announcement when the Federal Reserve did not begin tapering their bond purchasing program. The primary events in October which drove equity markets were the appointment of Janet Yellen as Ben Bernanke’s successor, the government shutdown, and the potential of the U.S. defaulting on its debt. All these events were resolved, with the government shutdown ending, a delay in decisions regarding the debt ceiling to early next year and a general sigh of relief as markets assessed that that Yellen would be a dovish central banker. This motivated yield seeking investors to rally equities and high yield debt. We see this continuing into Yellen’s Senate confirmation in November.

Fund Commentary

The Purpose Total Return Bond Fund delivered positive returns in October from exposure to corporate credit through both High Yield and Investment Grade. The Fund has exposure to three credit segments: government, investment grade and high yield. In the aftermath of the government shutdown we saw an increasing appetite among investors for yield. This shift in market appetite for credit was reflected by changing allocations at the Fund’s monthly rebalance. The weight of the credit segments were increased dramatically at the end of October to hold approximately 66% in High Yield, with the remainder primarily invested in Investment Grade. Meanwhile, the cash component in the fund was decreased substantially from two thirds in September to approximately 10% at the end of October.

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