Often a small mutual fund is able to outperform large funds by getting a couple of big winners early on. This may attract the attention of investors who can quickly turn a small fund into a big one, changing everything.
Steadyhand Equity Fund (Fund code: SIF130 (NL)) began in February, 2007, to invest in a focused group of 20 to 25 Canadian and foreign companies. The investment objective is to grow your capital at a pace that significantly exceeds inflation.
This fund has a portfolio that’s well-balanced among industry sectors. It holds about 27 per cent in industrial goods and services, 17 per cent in financials, 16 per cent in retailing, 16 per cent in oil and gas, 12 per cent in materials, eight per cent in consumer products and four per cent in health care. The fund currently holds about 44 per cent in foreign investments — more than half of this in the U.S. — and 3.5 per cent in cash.
The fund holds mostly conservative investments. One of Canada’s big banks, TD, is its top holding, accounting for 6.1 per cent of the portfolio. In the energy sector, 5.8 per cent is invested in Suncor Energy, Canada’s largest integrated oil and gas producer. The fund’s consumer-products exposure is represented by CVS Caremark (5.7%), America’s largest pharmacy health-care provider, and Loblaw Companies (4.2%), Canada’s largest food retailer. In technology, the fund’s single holding is Visa Inc., the world’s largest global payments company, which accounts for 5.1 per cent of the portfolio.
Fund has many blue-chip holdings
The fund’s volatility rating is fairly low at four. We think that’s because a large proportion of the fund is invested in big, blue-chip companies, both in Canada and the U.S.
The fund’s performance has averaged 6.1 per cent these past seven years. That’s a top-quartile performance in the Canadian focused equity category. Its five-year record, with an average of 12.1 per cent, is also a top-quartile performance. Over the seven-year period from 2008 to 2014, the fund performed in the top half of the category in six years: it was a top-quartile performer in three years, a second-quartile performer in three years, and a fourth-quartile performer in one year.
Steadyhand Equity Fund is available only to residents of Alberta, B.C., Manitoba, Ontario and Saskatchewan, directly from the fund management company with no load. You can also invest through registered mutual-fund dealers. But you may be charged a fee by a dealer. You must invest a minimum of $10,000 initially. The fund is, of course, eligible for RRSPs.
Steadyhand Equity Fund remains fairly small, with assets of just $61.5 million. That gives substantial flexibility, which it has capitalized on successfully so far. The fund is appropriate for investors who want attractive long-term growth from a core equity fund, but who can accept medium to high investment risk.
Canadian Mutual Fund Adviser, MPL Communications Inc.
133 Richmond St. W., Toronto, On, M5H 3M8, 1-800-804-8846
Canadian Mutual Fund Adviser •2/23/15 •