Third Quarter 2025 Commentary | Tactical Sovereign Bond Fund

Market Commentary

On September 17, 2025, both the Bank of Canada (BoC) and the U.S. Federal Reserve (Fed) lowered their policy interest rates by 25 basis points (bps). The BoC reduced its overnight lending rate from 2.75% to 2.50%, while the Fed cut the Fed funds rate range from 4.25%-4.50% to 4.00%-4.25%.

In Canada, broad-based economic weakness prompted the move. Real Gross Domestic Product (GDP) contracted by 0.4% in the second quarter (Q2), led by a 2.5% decline in exports amid the ongoing trade war. Inventory accumulation contributed 0.8% to GDP, though much of this is likely involuntary, reflecting slower demand and rising unemployment. Excess inventories may dampen production in Q3, potentially resulting in another quarter of negative growth.

Imports also declined in Q2, which technically added to GDP but signaled weak domestic demand. The nationwide boycott of U.S. goods further constrained trade activity. Meanwhile, the unemployment rate rose to 7.1%, the highest since 2021, and average weekly earnings growth moderated to 3.3% year-over-year.

Fund Performance and Positioning

The Tactical Sovereign Bond Fund underperformed its benchmark in Q3, returning 0.3% compared with the benchmark’s 1.0%¹. As of quarter-end, the Fund’s Effective Duration stood at 7.9 years².

Performance during the quarter was supported by tactical bond trading.

While capital preservation remains a key tenet of the Fund’s strategy, the Fund benefits from its ability to capitalize on evolving market dynamics within bond and currency markets.

¹Series F, total return CAD terms
²Duration is a measure of the sensitivity of the price of a bond to a change in interest rates. A fixed income security (or fund) with a higher (longer) duration would indicate a higher sensitivity to interest rates and thus, higher interest rate risk.

Standard performance as at September 30, 2025.

Company	1 Year	3 Year	Since Reorganization3 (August 27, 2018)	5 Year	Since Inception (July 25, 2016)
Caldwell Tactical Sovereign Bond Fund Series F	4.0%	3.6%	1.5%	0.7%	0.8%
S&P Canadian Sovereign Bond Total Return Index	1.9%	3.5%	1.5%	-0.4%	0.9%

 

³The Fund, following a security holder vote, changed its fundamental investment objective August 27, 2018 and also reclassified former Series I units to the current Series F. For more information refer to the Simplified Prospectus of the Fund.

The information contained herein provides general information about the Fund at a point in time. Investors are strongly encouraged to consult with a financial advisor and review the Simplified Prospectus and Fund Facts documents carefully prior to making investment decisions about the Fund. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Rates of returns, unless otherwise indicated, are the historical annual compounded returns including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any unitholder that would have reduced returns. Mutual funds are not guaranteed; their values change frequently and past performance may not be repeated.

Publication date: October 28, 2025.