By Tom Bradley
In his column in today’s Financial Post ('Doing all of the Right Things'), Jonathan Chevreau reviews Steadyhand. The article is a book end of sorts, because Jonathan was the first one to write about us in the summer of 2006, just as our business model was being developed, and we’re now within a few weeks of celebrating our 5th anniversary.
I won’t go through the piece in detail, but I do want to clarify the performance comparisons Jonathan uses. He concludes by saying, “it’s pretty much a tie between indexing and undexing”. I think this significantly understates the results our clients have experienced. As we’ve shown in our regular performance assessments – the latest being the Balanced Income Performance Assessment (January 2012) and the Steadyhand versus ETF faceoff (November 2011) – our balanced clients are solidly in the first quartile compared to the clients of other firms, and have achieved returns that are well ahead of comparable ETF portfolios. There will be periods when we’re in another quartile and trail the indexers, but this (almost) 5-year period is not one of them.
Our funds don’t compare easily to the market indices because in most cases they’re not limited to a single asset class. The Income Fund, which has consistently been one of the top funds in its category, holds income-oriented stocks as well as bonds. The Equity Fund is a Canada-centric fund, but also provides our clients with U.S. and foreign equity exposure. As we arrive at the 5-year post, our returns will show that only the Global Equity Fund, which struggled in 2010 and 2011, trails its benchmark. (Note: The fund performance I refer to is after fees, but before any portfolio rebates. The indices have no fees included.)
As the chief investment guy, I don’t feel like we’ve shot the lights out so far. We can do better. But for our first five years, we don’t need to go to a shootout. The scoreboard shows undexing has beat indexing in regulation.