Mutual fund company Steadyhand recently opened up their Vancouver office. It’s founder is Tom Bradley, formerly of Phillips, Hagar, & North, better known recently for his blog that he started in June 2006. I read his blog once in a while and in general I like what he has to say. I can’t see myself buying any of their funds though. There is zero past performance so you have to take their word for it that they know what they are doing. Their website says “We have a straightforward lineup of no-load, high-conviction funds that we offer directly to investors. Our fees are low, our portfolios are concentrated and our managers focus on making you money, rather than tracking an index.” Again, my faith in mutual fund managers’ ability to beat indexes (after MERs are taken into account) is almost non-existant. According to Jason Zweig in Investing Intelligently 4th Revised Edition page 248, only 37 of 248 U.S. Stock funds outperformed the Vanguard 500 Index Fund from December 1982 to December 2002. I could go on with more references. The fact that Steadyhand’s MERs are fairly low should make their job of beating their competition (indexes) a bit easier. All of SteadyHand’s funds have MERs of 1.7% or less. That might be a lot less than the average mutual fund, but it’s still a lot higher than the 0.5% I can get for iShares MCSI Index ETF (XIN). One thing they have done that I like is that they offer a small discount in the MER, the longer you hold the mutual fund.
So if you’re thinking about giving your money to Steadyhand, first listen to what Tom Bradley has to say about passive index ETFs: “Exchange-traded funds (ETFs) are a great product. They provide exposure to the equity market for a reasonable price. If you buy the iShares XICs, you can be assured of getting the return of the S&P/TSX 60 for only 0.17%. That’s a good deal.” He emphasized it again later: “As I pointed out a couple of weeks ago, I still think the low-cost, broad market ETFs are excellent products, in particular, the iShares XICs, which track the S&P/TSX 60 Index and have an MER of 17 basis points.” (Some of you might have noticed that he was referring to XIC when he should have been referring to XIU).
2 thoughts on “Steadyhand Opens for Business”
One correction & one clarification:
1. MER for XIN is actually 0.5%. The currency hedge costs 0.15% on top of the 0.35% MER for EFA.
2. XIC used to be the same as XIU (except that it was “capped”. i.e. one stock can make up only 10% of the index). Then the TD ETFs folded and XIC changed its mandate to track the TSX Composite.
I mentioned 2. in my last sentence. Thanks for correcting the MER for XIN.