I recently attended the Steadyhand luncheon in Toronto. They run these info sessions with regularity. If you’re in search of a sensible lower fee investment option and you’re in the area I suggest that you take them up on the offer of lunch and a very informative and passionate presentation. The lunch I attended was hosted by David Toyne and founder Tom Bradley. We are kindred spirits in that the folks at Steadyhand exist as a response to the unfortunate investment norm in Canada – high fee mutual funds that usually come attached to some very poor or on non-existent advice. We don’t have room to go into the unethical behaviour that also captures the headlines all too often.
Steadyhand offers their own collection of actively-managed mutual funds, but at very reasonable fee structures. In fact, the average Steadyhand client pays less than 1.0% at just .96%. And that fee rate is all-in.
Here’s an example using the Income Fund. More equity-focused funds will have higher fees.
That includes the advice component that may also be eligible for use as a tax deduction for taxable accounts. Check with your accountant to confirm, of course.
Steadyhand investors are rewarded for their loyalty and they are rewarded with lower fees as the assets grow. Here’s the breakdown on fee reductions for asset levels and for client tenure, based on family assets.
Clients with tenure and family assets above $250,000 and then above $500,000 are able to reduce their total fees considerably compared to the posted rates. The fee declines are based on additional assets above these thresholds. Here’s an example using the Founders Fund.
Yes the undexers have a place on Cut The Crap Investing.
Steadyhand cheekily embraces Undexing. It’s the near ‘opposite’ of embracing the buy the broad market plain vanilla approach of index ETFs.
And the key is certainly that concentration. You can’t beat the market unless you do something significantly different than buying a large group of the leading companies in each sector. Concentrate dammit! they say, and practice. They employ a series of sub advisors who manage their funds.
The Founders Fund and Builders Funds are fund-of-fund offerings comprised of the sub-advised managed funds. Steadyhand founder Tom Bradley manages the asset allocation for the Founders Fund. It is a classic balanced portfolio currently in the range of 60% stocks and 40% bonds and cash. The Builders Fund is a growth portfolio that is close to 100% stocks, it does currently hold some cash. That fund is managed by Steadyhand’s Salman Ahmed.
To benchmark the returns, I compared the Founders Fund to the Tangerine Balanced Portfolio that is also 60% stocks and 40% bonds. As you may know the Tangerine Portfolios are also mutual funds with a fee of 1.07%. The portfolios are index-based.
So far it is advantage Tangerine with 5-year returns of 6.4% annual compared to 4.6% annual for the Founders Fund. That may be due to an additional allocation to the Canadian market market for the Founders Fund. Also the Steadyhand Global Equity Fund has been a laggard.
The Builders Fund is less than one year from inception and Steadyhand is not yet allowed to post returns.
Solid Income Returns.
On the returns front we’ll find the Income Fund has very solid returns for a very conservative fund that is currently 79% bonds; it then holds dividend paying companies and REITs (real estate). For what it’s worth, I like that approach for an Income Fund. That fund certainly beats the pants off of Tangerine’s Balanced Income Portfolio (75% bonds) for the 10-year number at 7.4% annual vs 5.5% for Tangerine.
The Equity Fund that invests in North American and International Equities has some very solid returns. Remember with greater assets and that tenure, you would have been able to lower those fees and boost those returns above the posted rates of return.
Given that there is considerably more growth potential in the small cap arena Steadyhand has recently launched funds covering those portfolio growth kickers. Ironically I recently wrote on that subject with Adding A Growth Kicker Or Three To Your ETF Portfolio.
The Steadyhand promise.
I think the mission could be summarized in David Toyne’s proud boast that they pick up 95% of incoming client phone calls on the first ring. Of course, you’ll have to call them during those generous business hours of 10 am to 8 pm Eastern Time.
And the thrust of the offering is embodied in the name, Steadyhand. Nothing works in the land of investing like consistency and patience. It takes a steady hand on the tiller of the funds. It takes a steady and consistent approach on the investor’s front. Steadyhand is there to educate and coach and to make sure that clients are fully aware of the risks – and are prepared to accept the risks and stay the course through any market turbulence. They are also there to help you reach your goals. Of course, we have to take on a certain amount of risk and put in certain amounts of monies to generate returns that match the goal. At times we may need to add more monies or take on more risk. Of course as Steadyhand will advise, we also cannot invest outside of our risk tolerance level.
While Steadyhand has those fund-of-fund packages there is the valuable process of getting to know you and your life goals and building a custom portfolio for you.
While the advice and planning is more than meaningful, it is a form of ‘advice light’. If you do need a full financial plan with respect to taxation and retirement funding models, estate planning and more you will also need to visit a full service advisor. Of course a fee-for-service advisor may do the trick.
If you wish to purchase the funds directly through your discount brokerage (check on that availability) please have a read of this Steadyhand blog post. Not all discount brokerages allow access to funds without those trailing commissions.
Do you need a Steadyhand?
I do think think this is a nice combination of meaningful advice with fee structures that can be lowered to a very reasonable and attractive level. If one goes the Steadyhand route they should be aware that this is true active management. The fee structures may not be the most important component. The funds are set up to outperform. Underperformance is also a possibility. This option will be suitable for an investor who needs and wants that accessible contact and advice and coaching; and they also want an active hand on the tiller of the investments and the asset allocation.
An additional benefit is the open and complete disclosure of all fees and returns by way of their quarterly statements. They go well and beyond what is required by regulatory standards. Morningstar states that they are the poster child of stewardship.
Check their site for luncheon announcements. Nice sandwich, fruit and dessert by the way.
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Contact me, Dale @ firstname.lastname@example.org or better yet, leave a message on this post.