By: Robert Koloshuk
Chief Investment Officer at WaveFront GAM
Staying Invested When It Matters Most
The WaveFront All-Weather Alternative Fund (WAAV) returned +0.44% in July, bringing its total cumulative return since inception to 53.06%, well ahead of the 37.17% gain for the blended benchmark. Our risk-adjusted profile continues to stand out, with a Sortino Ratio of 1.03 versus the benchmark’s 0.51, and lower correlation to both U.S. and Canadian equity markets.
July’s leadership came from Real Estate and Global Equities strategies, while Systematic Macro & Trend and Fixed Income provided stability amid rising yields. Global Equities contributed modestly, and Special Situations remained a minimal allocation.
Performance Highlights - as of July 31, 2025*
* Performance Disclaimer
*Performance is past performance and does not guarantee future results. Data Source: WaveFront & Bloomberg. Blended Benchmark Constituents: 20% SG CTA PR USD, 20% iShares MSCI ACWI ETF, 20% S&P GSCI Precious Metal TR, 20% Morningstar Canada REIT GR USD, 20% iShares 20+ Yr Treasury Bond ETF.
July Recap - "Risk-On but Uneven" Market
Investor sentiment improved in July as new trade deals with Vietnam, Japan, and the EU brought some clarity. Equity markets hit new highs, with growth and emerging markets leading. AI-driven strength in Asia continued to power Taiwan and Korea.
At the same time, bond markets struggled. Global bonds lost ground as yields climbed. Inflation data surprised slightly to the downside, but risks remain tilted toward higher costs if fiscal spending and tariff rebates accelerate. In short: optimism is back in the headlines, but the underlying risks haven’t gone away.
Portfolio Highlights - as of July 31, 2025*
* Portfolio Disclaimer
*Performance is past performance and does not guarantee future results. Data Source: WaveFront & Bloomberg. Portfolio exposure and holdings are as of May 31, 2025. Portfolio holdings and sectors will fluctuate over the life of the mutual fund as the portfolio holdings and market value of each security changes. The portfolio manager(s) may change the portfolio allocations in some or all of the sectors.
CIO Insights: July Market Review
Most strategists are calling for stagflation - weak growth and higher costs driven by tariffs. A deflationary shock is seen as unlikely but possible. On the other side, high inflation - potentially worse than 2022 - remains a risk, especially if tariff rebate cheques move forward. There are also longer-term risks tied to U.S. policy: a weaker dollar, currency devaluation, and even the chance of hyperinflation. More optimistically, we could see inflation return to target while equities continue to outperform, which would leave stagflation-positioned investors flat-footed.
Here’s my view: the odds of inflation holding in a “stable but high” 2.5%–3.5% range, with growth stuck at 1%–3%, are very low. History suggests the chance of both CPI and GDP staying pinned there for the next two years is closer to one in three. Markets rarely remain in the consensus “equilibrium.” Pundits lean that way because it is safe and supports sales, not because it is the most likely outcome.
At WaveFront, we don’t bet on one path. WAAV is designed to handle the full range of outcomes - inflation, deflation, growth, or recession - without relying on forecasts. That’s how we aim to deliver stable returns when consensus breaks down.
Looking Ahead: All-Weather Means Always Ready
Our model continues to rotate capital toward lagging areas like trend-following and fixed income, while trimming recent winners such as equities. That may look counterintuitive, but it’s how we stay prepared for what’s next instead of chasing what just happened.
The broader market is priced for perfection - growth, productivity gains from AI, and contained inflation. But history tells us perfection rarely lasts. WAAV’s edge is in its ability to adapt when the narrative shifts, providing Canadian investors with the country’s first true all-weather portfolio.
About the WaveFront All-Weather Alternative Fund
Introducing Canada's premiere all-weather investment solution, the WaveFront All-Weather Alternative Fund. Engineered to deliver stability and consistent performance, regardless of the market environment, now available as both a mutual fund and ETF.
The WaveFront All-Weather Alternative Fund is engineered to deliver consistent, superior risk-adjusted returns across diverse market conditions. With a dynamic multi-asset and multi-strategy approach, it offers a next-generation liquid alternative designed for stability and growth.
IMPORTANT DISCLAIMER: For the period from inception to December 31, 2024, the performance data of Series ETF reflects the historical return of the LP, which for this period had substantially similar fees as the LP. Effective January 2, 2025, WaveFront All-Weather Fund, LP (“the “LP”) was merged into WaveFront All-Weather Alternative Fund. Prior to the merger, the LP was distributed to investors on a prospectus-exempt basis in accordance with National Instrument 45-106 and was not a reporting issuer from its inception on November 1, 2019 until the merger. Financial statements of the LP are posted on Arrow’s website and are available to investors upon request.
Commissions, trailing commissions, management and performance fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. The indicated rates of return are the historical annual compound total returns net of fees and expenses payable by the fund (except for figures of one year or less, which are simple total returns) including changes in security value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.
The risk level of a fund has been determined in accordance with a standardized risk classification methodology in National Instrument 81-102, that is based on the fund’s historical volatility as measured by the 10-year standard deviation of the fund’s returns. Where a fund has offered securities to the public for less than 10 years, the standardized methodology requires that the standard deviation of a reference mutual fund or index that reasonably approximates the fund’s standard deviation be used to determine the fund’s risk rating. Please note that historical performance may not be indicative of future returns and a fund’s historical volatility may not be indicative of future volatility. The rates of return are used only to illustrate the effects of the compound growth rate and are not intended to reflect future values or returns on an investment fund. The Investment Growth chart shows the final value of a hypothetical investment in securities in this series of the fund as at the end of the investment period indicated and is not intended to reflect future values or returns on investment in such securities. The comparison presented is intended to illustrate the historical performance of the fund as compared with the historical performance of a widely quoted market index or a weighted blend of widely quoted market indices. There are various important differences that may exist between the fund and the stated indices that may affect the performance of each. The objectives and strategies of the fund result in holdings that do not necessarily reflect the constituents of and their weights within the comparable indices. Indexes are unmanaged and their returns do not include any sales charges or fees. It is not possible to invest directly in market indices.
