October in one sentence: The risk asset party kept hopping on easier-policy expectations right up until Powell hinted he might take the punch bowl away, while a precious metals pullback reminded us that correlation risk is alive and well.
By: Robert Koloshuk
Chief Investment Officer at WaveFront GAM
The WaveFront All-Weather Alternative Fund ETF (WAAV) advanced +1.13% in October, bringing year-to-date performance to +12.48% and annualized returns since inception to +9.22%. These results reinforce WAAV’s ability to deliver balanced, equity-like returns with lower volatility, through the combination of diversification, systematic risk management, and institutional-grade investment strategies - all within a single, daily-liquid investment solution.
Performance in October was mixed across asset classes, underscoring the value of the Fund’s multi-strategy design. The Alternative Defensive and Fixed Income sleeves were the primary contributors, helping offset weakness elsewhere. In contrast, Real Estate was the largest detractor as rate-sensitive assets gave back part of their recent gains, while the Systematic Macro & Trend sleeve also modestly detracted amid choppy commodity trends. Equities were marginally positive, continuing to benefit from the broader risk-on bias tied to falling policy-rate expectations.
During the month, an additional Special Situations position was initiated, bringing the fund’s total tactical investments to two. Both opportunities target identifiable market inefficiencies with asymmetric risk-reward potential, implemented within WAAV’s disciplined, risk-budgeting framework.
Performance Highlights - as of October 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.
How WAAV is Positioned
The portfolio remains broadly diversified across five core asset class sleeves - Global Equities, Fixed Income, Real Estate, Systematic Macro & Trend, and Alternative Defensive - with risk budgets dynamically calibrated through WaveFront’s proprietary volatility-forecasting and correlation framework.
October saw only modest month-over-month shifts in allocation, reflecting a continuation of the Fund’s balanced, late-cycle positioning. Equity exposure increased slightly, maintaining a concentration in large-cap and technology-oriented names that continue to exhibit relative strength as policy-rate expectations soften. Fixed Income and Real Estate exposures were largely unchanged, with duration and credit risk remaining stable.
Within the Systematic Macro & Trend sleeve, exposure decreased slightly as models trimmed risk following a volatile month for commodities, particularly precious metals. The Alternative Defensive allocation also declined modestly as the Fund redeployed a small portion of its risk budget into an opportunistic Special Situations position, a tactical exposure linked to market inefficiencies in the silver complex.
The addition of this position brings total Special Situations exposure to 0.29% of portfolio risk and represents an idiosyncratic, asymmetric trade opportunity designed to complement the Fund’s systematic core. Those interested in learning more about how these positions are identified and managed are encouraged to contact the WaveFront team for further insight.
Overall, the Fund remains well balanced between participation and protection, with calibrated exposure across growth, income, and defensive assets - and the flexibility to adapt quickly as market conditions evolve.
Portfolio Highlights - as of October 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 Oct 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.
Overall, the strategy is positioned for a “late-cycle” environment characterized by declining nominal growth, easing policy expectations, and cross-asset volatility suppression that could unwind quickly. Our goal remains unchanged: to deliver stable, risk-adjusted returns across diverse market conditions by dynamically adjusting exposures rather than making binary macro calls on the stock market.
CIO Insights: Market Context & Outlook
October extended the “lower rates = risk-on” dynamic we highlighted last month, right up until Powell gave the press conference for the October FOMC. Equities continued to grind higher alongside precious metals for much of the month, supported by easing policy expectations and the Bank of Canada’s rate cut. Late in the month, precious metals gave back a chunk of gains, more consistent with profit-taking than a change in fundamentals, despite a softer U.S. CPI print. With U.S. data partially constrained, markets reacted to Canada’s inflation data, underscoring the current signal-to-noise challenge.
A useful way to frame the month: currencies broadly weakened versus gold while risk assets rose, right up until the FOMC presser. That linkage is intuitive, lower policy rates reduce the relative appeal of cash, lift demand for risk assets, and, via currency effects, can mechanically raise the local-currency value of a corporation’s assets. The takeaway for investors is that October’s early strength was multi-factor (rates, currencies, positioning), and none of those factors were necessarily earnings. Meta’s big selloff related to a one-time tax charge goes to show how heavily influenced the interpretation of earnings data can be by the macro backdrop.
Hedges, Correlations & Risk Management
Cross-asset correlations remain a key thing to watch. A single policy or inflation surprise can pull equities, metals, and duration into the same direction - the scenario our convex hedges are built for. We maintained deep OTM hedges sized to be inexpensive in calm periods yet meaningful in a volatility shock. Regarding asset allocation, if we see a re-acceleration in inflation, a hawkish policy surprise, or a disorderly USD rally, we expect the model to shift risk into managed futures. Conversely, rising dispersion and cleaner medium-term trends would cause the model to lean incrementally into global equities while keeping overall balance.
Looking Ahead: Participation with Protection
Policy hopes are supportive, but the path is unlikely to be linear. A softer-data narrative and easing outside the U.S. have already nudged investors out of cash and into risk assets; the core question into year-end is whether inflation surprises or policy messaging interrupt that narrative. WAAV’s job is not to predict the inflection point, it’s to stay adaptable: participate when conditions are constructive and defend early if correlations and volatility rise.
What investors should remember: WAAV is engineered to balance participation and protection - systematic rebalancing for trend changes, and convex hedges for the sudden events that systematic strategies can’t keep up with.
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.
