March 31, 2023

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 Founders Fund’s strong start to the year masked a quarter that was full of twists and turns. When the dust settled, stock markets were up, much-maligned bonds performed well, and the fund had a return of 4.9%. This extends a solid recovery that started in the fall, driven by strong performances from the Global Equity Fund and both Small-Cap Equity Funds.
  
• Our equity funds benefited from less speculative fervor and more focus on profitability and financial strength. As always, there were cross currents. A modest position in oil & gas helped (after hurting last year), as did our limited exposure to banks, where we managed to avoid many of the steep declines (we don’t own any U.S. banks in our funds). On the other hand, our holdings in software and semiconductors weren’t enough to keep up with a strong tech recovery.
  
• Founders’ equity exposure was modestly reduced during the quarter from 65% to 62%. We took advantage of intermittent strength in the stock market to trim all four equity funds. In line with this, new flows into the fund were allocated to bonds (Income Fund) and cash (Savings Fund). The fund’s bond weighting is up to 31%, which is still below target but well above levels of a year ago, and stocks are slightly above their long-term target of 60%.
  
• As always, 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 six 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 new holdings in Interfor (Canada), ESAB Corp. (U.S.), and Rohto Pharmaceutical Co. (Japan), and the complete sale of Enghouse Systems (Canada), National Vision Holdings (U.S.), and Spirent Communications (U.K.).
  

Positioning

• In the middle of last year, the investment landscape was attractive. Stock valuations assumed the worst and investor sentiment, a reverse market indicator, was equally bearish. Today, both are in neutral territory, and that’s where the fund is positioned, close to its target weighting in stocks and fixed income.
  

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.