Insight, with perspective.

The autumn data have confirmed what we argued in July: inflation is drifting lower, but not quickly enough for central banks to move in large steps. We now expect the Federal Reserve to deliver two further cuts by the end of 2027, with the terminal rate settling well above the pre-2020 range.

For portfolios, that argues against reaching for duration. The Balanced Fund holds its fixed-income sleeve at a duration of 4.1 years, close to the low end of its range, and we are using short-dated investment-grade credit as the main source of income.

In equities we remain fully invested but selective. Earnings breadth has improved outside the largest technology names, and our US Core Equity portfolio is positioned for that broadening rather than for a continuation of narrow leadership.

The third quarter was a reminder that quality and value can lag in a momentum-led market. Our largest relative detractors were the underweight in two mega-cap technology names and an overweight in US health-care distributors, which fell on policy headlines we judge to be transient.

We initiated three positions during the quarter: a global industrial-gas producer, a specialty insurer and a regional rail operator. Each was purchased at a free-cash-flow yield above 5% with net debt below two times EBITDA, consistent with the fund’s quality screen.

Since inception the fund has returned +85.9% cumulatively over five years, net of fees, and we continue to expect its return profile to be smoother, not necessarily higher, than the benchmark.

Across the investment-grade municipal universe, the spread between AA and BBB issuers is now the narrowest it has been since 2021. Falling rates have brought retail flows back into the asset class, and those flows have lifted every boat.

Our own work on state and local balance sheets suggests the next two fiscal years will be harder than the last two. Reserves built during the pandemic are being drawn down, and several large issuers face pension contributions that rise faster than revenues.

The Municipal Income Fund has therefore moved up in quality, with 71% of the portfolio in AA or better, and has shortened duration modestly. We would rather give up a little carry today than defend a spread that is not compensating us for the risk.

The yield premium of Asia investment-grade corporates over comparable US issuers has narrowed to roughly 35 basis points, from more than 70 at the start of the year. Much of the compression reflects improving fundamentals in Korea, Singapore and Australia rather than complacency.

We have added selectively to Korean utilities and Singapore real-estate operating companies, where covenant packages remain conservative. We have reduced exposure to Chinese technology issuers, not because of credit deterioration, but because the pricing no longer reflects the policy uncertainty.

The Asia Investment Grade Bond Fund yields 5.1% at the portfolio level with an average rating of A-, and we are comfortable holding that carry while spreads settle.

Clearpath Capital is pleased to announce the appointment of Julian T. Mehta, FRM, as Chief Risk Officer, effective 1 September 2026. Julian joins the Investment Committee and reports to the Chief Executive Officer.

Julian brings more than 15 years of experience in market and credit risk, most recently leading the Asia-Pacific portfolio risk function at an international bank. He will oversee risk budgeting across all eleven strategies, portfolio construction analytics and the firm’s regulatory reporting.

“Risk management at Clearpath is a first-line discipline, not a back-office function,” said Alexander W. Lam, Founder and Chief Executive Officer. “Julian’s experience strengthens a culture that already treats risk budgets as binding.”

The Balanced Fund’s strategic allocation is 60% growth assets and 40% defensive assets. At the mid-year review the Investment Committee moved the US equity weight from 41% to 38% and redeployed the proceeds into one-to-three-year investment-grade corporate credit.

The change reflects valuation rather than a change in our economic view. US large-cap equities trade at 21 times forward earnings, and the risk budget of the fund does not allow us to hold that valuation at a full weight without reducing exposure elsewhere.

The fund’s realised volatility over the past twelve months was 7.4%, within the 6–9% band that defines its R3 rating.

Roughly 38% of Russell 2000 debt is floating rate, against 9% for the S&P 500. Our analysis of interest coverage across the index suggests that a 100 basis point reduction in policy rates lifts aggregate small-cap earnings by close to 4%.

Markets have begun to price this, but unevenly. Profitable small caps with fixed-rate debt have re-rated; the more leveraged, floating-rate issuers have not. That is where our US Small Cap Fund has been adding, name by name, with a strict requirement for positive free cash flow.

We continue to avoid the roughly 40% of the index that does not earn a profit.

Across the North American middle market, the share of new loans with at least one maintenance covenant has fallen to below a third. Sponsors have more negotiating power than at any point since 2007, and lenders competing to deploy capital have given ground.

The Clearpath Private Credit Fund has declined 14 of the last 20 opportunities it reviewed, in most cases because of documentation rather than the borrower. Every loan in the portfolio carries a leverage covenant and a minimum liquidity covenant.

This discipline costs us deployment speed. We think it is the right trade.

Clearpath Capital has relocated its New York office to 245 Park Avenue, doubling the space available to the US client service and investment teams. The office remains by appointment and is led by Sophie A. Delacroix, Chief Operating Officer.

The firm first opened in New York in 2019 to serve US private clients and family offices invested in its municipal and US equity strategies. US-domiciled clients now represent close to half of firm assets.

Clients wishing to meet the team in New York may contact their relationship manager or the New York office directly.