In the investment business, Royal Bank and PH&N stole all the headlines last week (including on our blog), but there was another piece of news that relates closely to what we’re doing at Steadyhand. 

It was the announcement of a new firm being started by ex-Trimark manager, Tye Bousada.  The big news here is that EdgePoint Capital Partners is being backed by Trimark’s founder Bob Krembil.  Bob will be a large shareholder in the company and presumably will help seed the funds.  It is expected that some other former Trimarkers will sign on when their non-competes run out (Geoff MacDonald announced this week). 

In his Wealthy Boomer blog, Jonathan Chevreau interviewed Bob and it was quite revealing.  Bob was outspoken about how short-term the industry has become.  He said, “Managers have all become closet indexers and not just in Canada.  The whole industry has become about how far you are from the benchmark...It’s a stupid way to run money.”

Bob pointed out that EdgePoint will run concentrated portfolios, which is what he and his proteges have always done.

He was also outspoken about fees.  “The other thing wrong with this business is fees, especially with capital returns of single digits, the investment management fees in Canada are atrocious.”

The story is of interest to us (it’s all about us) because of Bob’s views about investing – non-benchmark orientation, concentrated portfolios and concern about high fees.  His comments echo our views of the world, or should I say, ours echo his.

The EdgePoint news came a few days after Derek DeCloet’s Report on Business column entitled Why Fund Investors are Voting with their Feet (which Scott blogged on), which was a critique of the big fund firms.   His comments, along with Bob’s, lay out the reasons why we started Steadyhand.  Derek also talked about the high fees.  He pointed out that the industry has lost touch with the end-user – the individual investor – because the focus is on the financial advisor.  Funds are designed around their marketing appeal first and investment merit second.  And he lamented that the industry’s leadership has passed from investment professionals to business managers.

Steadyhand is an investment firm run by investment people.  We have a defined investment philosophy.  Our funds are designed to generate wealth over the long term, not replicate the index or competition.  The people managing our funds are passionate about what they’re doing and have significant skin in the game.  It all makes perfect sense to us, and presumably to Mr. Krembil.