October 28, 2011
Vancouver, October 28 – Steadyhand Investment Management Ltd. (“Steadyhand”) announced today that it will be increasing the ‘One Simple Fee’ (“Fee”) on four mutual funds. The increases are being implemented to partially offset the cost of the Harmonized Sales Tax (HST).
As a result of the introduction of the HST, mutual fund companies are required to charge the new tax on the management fees and operating expenses of the funds they manage. The tax is charged on the proportion of the fund company’s assets under management held by investors residing in provinces that have adopted the HST. Prior to the introduction of the HST, fund companies were required to charge the Goods and Services Tax (GST) on management fees and operating expenses, but these expenses were exempt from the Provincial Sales Tax (PST).
The HST has impacted Steadyhand differently than other mutual fund companies. Its ‘One Simple Fee’ is fixed and covers all the funds’ operating expenses, including taxes. Steadyhand has been absorbing the cost of the HST since its introduction in Ontario and British Columbia on July 1, 2010. The company held its management expense ratios (MER) at the same level while MERs for most other funds have increased by the amount of the tax.
Steadyhand will continue to absorb the HST on its Savings Fund, but effective January 1, 2012, will increase the Fee on the Steadyhand Income Fund from 1.00% to 1.04% and the Steadyhand Equity Fund from 1.35% to 1.42%. The fee on the Steadyhand Global Equity Fund and Steadyhand Small-Cap Equity Fund will increase from 1.70% to 1.78%. If the company were to fully pass on the impact of the tax to unitholders, the fee increases would be higher.
Steadyhand’s fees will remain well below industry averages following the adjustments. In addition, clients who entrust more assets with the company will benefit from a fee rebate program. For consolidated assets above $100,000, clients receive a fee reduction. Also, clients who have been investing with Steadyhand for more than five years receive a further fee reduction.