By: Robert Koloshuk
Chief Investment Officer at WaveFront GAM
Staying Invested When It Matters Most
The WaveFront All-Weather Alternative Fund returned +1.32% in June, bringing its annualized return since inception to 7.84%, compared to 5.88% for the benchmark. The strongest contributors were Global Equities (+78bps) and Real Estate (+32bps), while Fixed Income (+30bps) also provided meaningful gains. Systematic Macro & Trend (-8bps) was the primary detractor, and Alternative Defensive strategies were flat.
Performance Highlights - as of June 30, 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.
Navigating a Risk-On, But Uneven Market
June closed out a volatile quarter, despite equity markets reaching new all-time highs. The quarter began with sharp declines triggered by the U.S. administration’s “Liberation Day” tariff announcement. But sentiment quickly reversed after a 90-day pause on reciprocal tariffs and a preliminary trade deal with China. Risk assets rallied, led by tech and emerging markets.
Beneath the surface, however, markets remain trendless and fragile, with leadership rotating unpredictably. In this environment, trend-following strategies, particularly in commodities and rates, often lag, while traditional beta exposures benefit from broad risk-on sentiment. At WaveFront, we don’t try to predict these shifts; we adapt to them.
Portfolio Highlights - as of June 30, 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.
Rebalancing Into Opportunity
Our systematic model continues reallocating into areas that lagged in Q2, like trend-following and fixed income, while trimming relative winners such as equities and gold. This may feel counterintuitive in the short term, but it reflects the core principle of risk-balanced investing: we don’t chase past performance, we prepare for the future.
This is especially important if correlations across traditional assets rise and volatility remains deceptively low. In April, both stocks and bonds declined in tandem, and this may be a more common occurrence in the future. Rising stock-bond correlations highlight the need for diversification beyond conventional balanced funds.
Second Quarter Recap: Volatility, Resilience, and Rotation
The second quarter offered a textbook case for why market timing is so challenging......and often costly. The April 2nd tariff announcement triggered a sharp correction: the S&P 500 fell 12%, and 10-year Treasury yields spiked 50bps within days. But by quarter-end, the market had fully rebounded, closing at new all-time highs and delivering +11.6% for the quarter.
Key drivers of this reversal included:
- Easing U.S.-China trade tensions
- Strong earnings from mega-cap tech
- A weakening U.S. dollar
- Global investor rotation into emerging markets and Europe
Commodities, however, underperformed. Energy markets reversed early gains as OPEC increased production. Brent crude briefly touched $79 during Middle East tensions but ended the quarter down at $67. Broad commodities posted -3.1%, lagging equities and credit.
The quarter also marked a shift in investor perception around U.S. markets. A downgrade to the U.S. sovereign credit rating, rising debt levels, and unusual tandem sell-offs in stocks and Treasuries challenged the traditional narrative of “American Exceptionalism”. As confidence wavered, capital rotated toward non-U.S. assets.
Looking Ahead: Discipline Over Prediction
As we head into the second half of 2025, the outlook remains clouded by geopolitical tensions, fiscal uncertainty, and structural challenges. The “One Big Beautiful Bill Act”, projected to add trillions to U.S. debt, is just one of many variables testing investor resolve.
WaveFront’s All-Weather strategy is built for this kind of environment. We remain diversified, disciplined, and data-driven, systematically adapting to evolving risk and return dynamics without relying on market timing or discretionary shifts.
Those who panicked during April’s selloff missed a powerful rebound. As history shows, emotional responses to market shocks are often costly. The value of staying invested, particularly within a resilient, adaptive framework like WAAV, has rarely been clearer.
In a world shaped by policy whiplash, geopolitical flare-ups, and AI-driven disruption, our focus remains constant: delivering long-term, risk-adjusted returns by staying strategically invested - not reactive.
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.
