Who owns Steadyhand?
Steadyhand is 100% employee-owned.
What measures are in place to protect my assets if Steadyhand encounters financial difficulties?
There are measures in place to protect mutual funds investors in Canada (outlined below). It's crucial to note, however, that the safeguards in place do not protect investors against the decline of an investment due to market fluctuations.
The assets (e.g. securities and cash) within the Steadyhand funds are held by our custodian, RBC Investor Services Trust. At all times, the assets of our funds are separated from us and can only be used for purposes related to fulfilling the investment objectives of the funds. In other words, they cannot be accessed for any other business purposes or activities.
While our funds’ assets are held by a custodian, they do not belong to the custodian. Nor do they belong to Steadyhand, our portfolio advisers, or our trustee. Rather, they belong to the funds themselves and, in turn, the unitholders of the funds. Neither Steadyhand nor any of the companies involved in providing services to our funds have any claim to the funds’ assets. Therefore, in the event that Steadyhand or any of our service providers face financial difficulties or bankruptcy, the assets within our funds are always protected. This segregation of ownership ensures that the unitholders of our funds are the only individuals (or entities) that have access or claim to the assets within them.
The above safeguards are legal requirements that must be adhered to by all Canadian mutual fund companies.
There are also measures in place to ensure that investors are protected if their mutual fund dealer declares bankruptcy. The fund industry’s governing body, the Mutual Fund Dealers Association of Canada (MFDA) has an investor protection fund that covers client losses (up to a certain prescribed limit) arising as a result of the insolvency of a MFDA member. Steadyhand is a member of the MFDA. For further information on the MFDA’s investor protection policies, visit their website at mfda.ca.
Do you offer advice, and what is the scope of your offering?
Advice is an integral part of our offering and is included as part of our all-in fund fees. We encourage you to take us up on it.
The first step we take is to explore your personal financial situation and objectives. We aim to get a good grasp of your unique circumstances by asking about things such as your financial goals, tolerance for risk, and debt, among others. After we get to know you, we move on to building a custom portfolio. We’ll recommend a Strategic Asset Mix (SAM) for you. This is simply a long-term mix of stocks and bonds that we feel will provide you with the best opportunity to meet your objectives. Next, we’ll suggest a mix of our funds to get you to your SAM. Once your portfolio is set up, the market will do its thing. And we’ll do ours. We’re here to provide a steady hand through our ongoing communications and reporting. To read more about our advice offering, click here.
What are your fees, and how so they compare to others?
Our fund fees range from 0.65% to 1.78% (our most popular fund, the Founders Fund, has a fee of 1.34%). These costs are all-in. We do not charge any transaction fees, administrative fees, or exit fees in the event you choose to close your account. In addition to our low base fees, we offer reductions based on the size of your assets with Steadyhand and your tenure with the firm. Fee reductions are made in the form of special distributions of additional fund units at month-end. Our Fee Reduction Program is designed to reward investors who have entrusted significant assets with Steadyhand, as well as long-standing investors in our funds.
Our average client’s fee is around 1.0%, which is among the lowest in our industry and considerably less than the fees charged by the big banks.
Can I purchase your funds through my investment advisor or discount broker?
Many, although not all, discount brokerages and advisory firms offer our funds. We do not pay trailing commissions to third parties and as a result, some firms choose not to offer our funds. Unfortunately, we have no control over which firms choose to include us on their platform.
The Fund codes for the Steadyhand funds are as follows:
Steadyhand Savings Fund - SIF110
Steadyhand Income Fund - SIF120
Steadyhand Founders Fund - SIF125
Steadyhand Builders Fund - SIF128
Steadyhand Equity Fund - SIF130
Steadyhand Global Equity Fund - SIF140
Steadyhand Small-Cap Equity Fund - SIF150
Steadyhand Global Small-Cap Equity Fund - SIF160
Can I transfer my Steadyhand fund units to another institution?
Yes, our funds can be transferred "in kind" to other institutions. Please note, however, that not all discount brokerages and advisory firms offer our funds, as noted above. Unfortunately, we have no control over which firms choose to allow their clients to hold our funds.
Does Steadyhand have a succession plan?
Yes. Steadyhand considers succession planning at two levels. The first relates to our fund managers (sub-advisors) and the second relates to the firm’s senior management and key decision makers.
With respect to our fund managers, none of our sub-advisors’ key personnel are planning for retirement in the next five years. Further, we keep an active back-up list of sub-advisors for our funds, which will allow us to make changes quickly if necessary.
In terms of Steadyhand’s key decision makers, Tom Bradley is the firm’s Chair and Co-Founder and Salman Ahmed is Chief Investment Officer (CIO). Tom and Salman work closely with one another on the investment side. If one of them were unable to perform his duties, the other is fully capable of stepping in and assuming their responsibilities. As for business operations, Steadyhand has a senior management team including Neil Jensen (CEO) and David Toyne (Chief Development Officer) who have extensive experience in running businesses – both have been President/CEO’s of much larger firms.
A further element of Steadyhand’s succession planning is spreading the firm’s ownership among employees. Steadyhand now has 14 shareholders, and the largest shareholders (Tom Bradley and Lori Lothian) have gradually reduced their ownership in the firm.
How secure is the ‘clients only’ section of the site?
Very secure. We use the same level of encryption as our friends at the big banks.
Will you ever add more funds to your line-up?
Possibly. Our goal is to provide a simple and straightforward line-up of funds, and we feel that our current offering covers the waterfront. We are not in the business of offering sector funds or specialty funds. All of our funds are well diversified and invest in the major asset classes that we believe (1) most investors should have exposure to and (2) we have a good chance of adding value versus the market. That said, if we feel that our clients would benefit from the introduction of a new fund that has long-term investment merit, we would consider adding such a fund to our line-up.
Why don’t you offer a pure Canadian equity fund or U.S. equity fund?
We believe that the Canadian market is led by a few sectors and lacks the breadth that is required to build a well diversified fund. While there are a number of world-class businesses in Canada in the financial sector, oil patch, and mining field, our market lacks depth in industries such as health care, consumer products and information technology. Therefore, we feel it makes greater sense to offer a fund that invests in a core group of Canadian equities that are complemented by a handful of foreign stocks to ‘fill the gaps’ left in the domestic market.
We don’t offer a pure U.S. equity fund for one simple reason: the market is too tough to beat. Along with being the largest market in the world, the U.S. is also the most efficient market in the world. All of our equity funds own select U.S. stocks that play an important role in their overall diversification. But for investors who want broad exposure to this market, we feel that a low-cost ETF is the way to go. Our fund line-up is focused in areas where we feel we can add long-term value for our clients.
When are the funds priced? Does the time of my purchase during the day affect the unit price I receive?
The funds are priced daily. The Net Asset Value Per Unit (unit price) for each fund is typically updated by 4:00 PM Pacific time.
If we receive a request to purchase or switch units in a fund before the close of the Toronto Stock Exchange (4:00 PM Eastern; 1:00 PM Pacific), we will process the request using that Valuation Day’s NAVPU. If we receive a request to purchase or switch units of a fund after the close of the Toronto Stock Exchange or on a day that is not a Valuation Day, we will process the request on the next Valuation Day, using that day’s NAVPU.
What are distributions? Which funds pay them? And when are they paid?
Distributions represent the mechanism whereby mutual funds transfer to unitholders any interest and dividend income and realized capital gains they have accrued over the course of the year. Most investors choose to re-invest distributions into additional fund units, but clients can also opt to receive them in cash. Immediately following a distribution, the price of a fund drops by an amount equivalent to the payment. However, investors receive additional units in the fund which are equivalent in value to the amount of the distribution. The end result is that the value of one's investment doesn’t change, but investors own more units in the fund at a lower unit price.
For example, assume you own 100 units in a fund that is valued at $10.00/unit (your investment is worth $1,000). If the fund pays a distribution of $0.10/unit, its price will drop to $9.90 following the distribution. However, if you follow the common practice of re-investing your distributions, you will receive an additional 1.01 units in the fund ($10.00/$9.90), so the value of your investment remains unchanged (101.01 units x $9.90/unit = $1,000).
All of our funds pay distributions, but at different frequencies. The Savings Fund pays a monthly distribution at the end of each month. The Income Fund and Founders Fund each pay distributions on a quarterly basis (at the end of March, June and September, and mid-December). The Equity Fund, Global Equity Fund, Small-Cap Equity Fund, Global Small-Cap Equity Fund and Builders Fund each pay distributions on an annual basis in mid-December.
What are the benchmarks for each of the funds?
Our funds are absolute-return oriented, meaning that they don’t seek to track common industry benchmarks or indices. The objective of each of our equity funds is to provide capital appreciation at a pace that significantly exceeds inflation. Our managers do not add securities to our funds with reference to a stock or bond’s weight in the index. They put our clients money where they think it will provide the best long-term return. As such, our funds look noticeably different than any benchmark against which they may be compared. Put simply, they are non-benchmark oriented.
That said, if our funds were categorized according to the benchmarks of the asset classes and regions in which they invest, the best representations would be as follows:
Savings Fund - FTSE TMX Canada 91 Day T-Bill Index
Income Fund - 75% FTSE TMX Canada Universe Bond Index; 25% S&P/TSX Composite Index
Founders Fund - 35% FTSE TMX Canada Universe Bond; 34% Morningstar Developed Markets Index; 26% S&P/TSX Composite Index; 5% FTSE Canada 91 Day T-Bill Index
Equity Fund - 60% S&P/TSX Composite Index; 40% MSCI World Index ($Cdn)
Global Equity Fund - Morningstar Developed Markets Index
Small-Cap Equity Fund - 85% S&P/TSX SmallCap Index; 15% Russell 2000 Index ($Cdn)
Global Small-Cap Equity Fund - S&P Global SmallCap Index
Builders Fund - 50% Morningstar Developed Markets Index; 20% S&P/TSX Composite Index; 15% S&P Global SmallCap Index; 10% S&P/TSX SmallCap Index; 5% FTSE TMX Canada 91 Day T-Bill Index
Do any of your funds use derivatives, and can they short securities?
Yes and no. As is written in our prospectus, all of our funds are permitted to use derivatives for hedging purposes to protect against losses and for non-hedging purposes as a substitute for direct investment or to generate income. In practice, our funds will rarely use derivatives. As for the second part of the question, our funds are not permitted to short sell securities.
Why do you use external managers to run your funds?
We hire external managers (i.e., independent investment management firms) to manage our funds so that we have the advantage of selecting the best money makers, in their particular area of expertise, to manage your money. It’s difficult for a firm with in-house managers to excel at managing money in all asset classes, as most firms tend to specialize or allocate resources to one or two asset classes in which they have a competitive advantage or particular expertise.
The managers of our equity funds focus solely on managing one mandate, be it North American equities (Fiera), global equities (Aristotle Capital Management) or small to mid-cap equities (Galibier Capital Management and TimesSquare Capital Management). The manager of our fixed income funds (Connor, Clark & Lunn) is well known for their expertise in managing bonds and income-equities, and they’ve been adding value for clients in this arena for over 25 years.
Do your fund managers operate their own funds as well?
Our managers focus primarily on managing money for high net worth individuals. They all have model portfolios upon which all client accounts, and the Steadyhand funds, are driven. Some of our managers also offer non-prospectused pooled funds for institutional investors that have minimum investment requirements.
Why wouldn’t I go directly to the manager?
Investors can go directly to some of our managers, but they have much higher minimum investment requirements than Steadyhand (think seven figures in most cases).
Do your managers have an ownership interest in your company, or vice-versa?
No. All of our managers are independently owned and do not have an ownership interest in Steadyhand. Similarly, Steadyhand is employee-owned and we do not have an ownership interest in any of our managers.
Can you fire your fund managers?
Yes. However, we were very diligent in selecting the managers of our funds and would only consider making a change under exceptional circumstances. Such circumstances could include a material change in personnel, a change in their investment philosophy or process, or a prolonged period of poor performance.
How were the managers selected?
Our managers were selected through a combination of screening, qualitative and quantitative analysis, interviews with key employees, and on-site visits. The most important criteria in our manager search were: each manager had to have an investment philosophy similar to ours; they had to have experienced people calling the shots; they had to have a proven record of success; and they had to be agile (i.e., flexible enough to pursue opportunities in the market).