Founders Fund

March 31, 2024

Fund Overview

• The Founders Fund is a balanced fund with a target asset mix of 60% stocks and 40% fixed income. It gains this exposure from investing in Steadyhand’s other funds.
  
• Tom Bradley (Steadyhand Chair and co-founder) manages the fund along with Chief Investment Officer Salman Ahmed. They have considerable scope to adjust the portfolio although without extremes in valuation and investor sentiment, their bias is to stay near the target mix.
  

Portfolio Specifics

• The fund started 2024 the same way it finished 2023. Strong returns were driven by a rising stock market (which we discuss more fully in Bradley’s Brief). All our equity funds contributed, with the Small-Cap Equity and Global Equity Funds leading the way.
  
• The bond market hasn’t been as helpful. Interest rates edged higher and as a result, bond prices declined. The Income Fund, which provides Founders with its fixed income exposure, held up well. The manager has done a good job of managing its bonds and dividend stocks through the recent interest rate volatility.
  
• As a reminder, we don’t make big or sudden moves to the fund’s asset mix, but rather gradual, deliberate changes based on bond and stock valuations, market sentiment (a contrarian indicator of value), and our fund managers’ views of the economic and market fundamentals.
  
• The Founders’ asset mix was little changed in the first quarter and remains close to its strategic long-term target. It was fully invested in stocks while the fixed income side was allocated to bonds (Income Fund) and cash (Savings Fund). Both offer a solid yield, although they provide different types of diversification. Bonds will be valuable when the economy is weak, and stocks are down. A decline in interest rates pushes up bond prices. Cash helps smooth out the Founders’ return stream and is a ready source of liquidity.
  
• We remind clients that Founders’ asset mix is important, as are the adjustments we make, but returns are primarily driven by the performance of the underlying funds. It’s through these 6 funds that Founders owns a mix of bonds and stocks across a wide range of industries, geographies, and currencies.
  
• The largest transactions during the quarter in the underlying funds included the purchase of Loblaw Companies (Canada), Nestle (Switzerland), and Warby Parker (U.S.); and the sale of Franco-Nevada (Canada), Aritzia (Canada), and Aon (U.K.).
  

Positioning

• The fund is closely mirroring its target asset mix. There are currently no extremes in the indicators we look at that would prompt us to deviate meaningfully.
  

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Important information about the Steadyhand funds is contained in our Simplified Prospectus. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated.