Steadyhand Funds – Where to From Here? Investor Event.

Steadyhand Funds. What a rockstar team! These folks really deliver. Simple presentation, a focus on behavioural finance, low cost investing. The founders and major owners don’t need to be doing this, but they know they have a duty to disrupt the old guard. Average investment fee is UNDER 1%. Why? How? They give discounts to loyal customers. Not just for having crazy obscene levels of wealth, but for staying the course. 5 year customers get a break of 7%, 10 year + gets 14%. There are also discounts to their One Simple Fee based on level of assets with the firm, reaching 40% off on the amount above $500k. Let’s face it, not everyone wants to do this alone. Some people want to speak to a real person, and they want someone to make asset allocation / macro calls. They have a simple lineup, with a total of 8 funds – 5 growth, 2 cash/income and 1 balanced. They mostly outsource the investment management to companies with great expertise in their specific areas.

Tools / Funds

One challenge many investors have told me they face is that they can’t see how they’re positioned overall once they have a handful of stocks, funds, or ETF’s.  Steadyhand has an asset look through tool that helps you make an assessment when using their funds.   Something I found interesting was that their Founders Fund (which has a 60/40 strategic mix) features industrials as the highest current sector weighing.  This is not something you see very often in mutual funds – whether they be balanced, equity, fund of funds, or otherwise.  The TSX 60 and the TSX Composite show industrials at around 10% each.  The S&P500 is no different.  The Founders Fund had performance of -4.9% in 2018, with a return of 6.1% net per year since inception in 2012.

People

Salman Ahmed is the Portfolio Manager at Steadyhand.  Salman has an interesting background at Morningstar, an independent organization which evaluates investment managers.  He, like the others on the team, are fierce fighters for investors.

I met for lunch with David Toyne, their Chief Development Officer. He had some really interesting insights on how Canadians do business, changes in the investing industry / regulatory landscape, and the importance of taking a true client first approach.

Fund Flows

While $14B of long term money was moved out of mutual funds in the 2nd half of 2018, Steadyhand took in $27mm.  Without any salesforce, that is very impressive.  It may be indicative of the comfort its clients have in adding while things are down, and the importance of keeping fees low to win client trust.

Market Valuations

The Steadyhand team mentioned that of 1700 companies ValueLine looked at since 1993, the average P/E (price to earnings ratio) was 16.7x.  It peaked last year at 21 – before the market drop took the ratio all the way back down to 16.4x.  By February 1st, it had risen back up to 17x.

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