By Scott Ronalds
We’ve had a few questions lately on the fee for the Founders Fund. The all-in fee for the fund is 1.34% (or less if your consolidated assets with Steadyhand exceed $100,000). The fee includes all of the fund’s operating expenses and taxes, as well as all management fees paid to Steadyhand and the managers of the underlying funds.
The Founders Fund is a fund-of-funds, meaning it holds our other five funds in varying proportions. Some investors have asked us whether they will be charged the fees on the underlying funds plus the 1.34% stated fee. The answer is No. The Founders Fund holds “Series O” units of our other funds, which are identical in composition but have no fees attached to them. In other words, there is no double-dipping on fees. The maximum fee you will pay to own the Founders Fund is 1.34%, which is meant to reflect the long-term fund mix of the portfolio (there are no additional fees for asset mix and rebalancing decisions).
We’ve also been asked if investors would pay a cheaper fee if they simply owned the underlying funds separately. The answer is it depends on the mix of funds at any given time. Consider the composition of the Founders Fund as of June 30th:
38% - Steadyhand Income Fund
25% - Steadyhand Global Equity Fund
25% - Steadyhand Equity Fund
7% - Steadyhand Savings Fund
5% - Steadyhand Small-Cap Equity Fund
If you were to own the funds in the above proportions, your portfolio’s overall fee would be 1.30% (before any discounts), so in this instance, it would be cheaper to own the underlying funds rather than the Founders Fund. This will not always be the case, however. If the Founders Fund held less of the Savings Fund and more of the equity funds, you would be paying a lower fee to own the Founders Fund than you would to own the funds separately.
Most balanced funds charge a premium fee for monitoring asset mix and rebalancing. This is not our intention with the Founders Fund. Tom Bradley’s oversight and fund allocation are part of the package. It’s all in the name of better investing.