Purpose Total Return Bond Fund September Commentary

Fund Highlights

  • Slightly down for the month, the bond Fund has aggressively been changing allocation between sectors to better reflect market momentum and provide effective wealth preservation.
  • With the Federal Reserve’s decision to leave benchmark rates unchanged, increasing risk aversion caused high yield bonds to slip further this year. The Fund allocated the lowest levels of high yield bonds since inception, 15%.
  • Canadian Government holdings rallied on safe haven flows and a continued dovish outlook for rates, leading to a positive contribution to the Fund, which increased allocation to Government holdings to 37%, the highest since inception.
  • This month the Fund maintained corporate investment grade bond holdings at 47% and increased government bond positions from 24% to 37% while high yield exposure remained low at approximately 15%.

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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