The following strategies guide our advice to clients and are reflected in the positioning of the Founders Fund.
Despite the current excitement around stocks, we suggest investors rebalance to their long-term targets given the strong performance in equity markets through the second half of 2025. Investors drawing from their portfolio, including those enrolled in the Steadyhand Retirement Withdrawal Program, should top up their spending reserve. We recommend that investors have two years' worth of expenses set aside in the reserve (please contact us if you’d like to learn more about the program).
The Founders Fund is positioned for maximum flexibility, allowing us to respond effectively to changing market conditions. Currently, our equity allocation is approximately 56%, below our strategic target of 60%. We hold 33% in bonds, near our target of 35%, and 9% in cash.
Bonds
The risk-return profile for bonds remains consistent with long-term averages. However, investors should expect higher volatility as bond prices respond to interest rate changes and central bank actions. Over the next five years, we anticipate annual bond returns of 3–5%, or a cumulative return of 15–25%.
Bonds are an essential component for most clients, offering safety during periods of stock market volatility and serving as a key diversifier in balanced portfolios.
In the Founders Fund, we’re slightly below our target weight in bonds. We continue to hold an above-target weighting in cash (9%), which provides both defence and liquidity. Most of the cash is invested in short-term money market instruments, which are currently yielding approximately 2.7%, pre-fee (as of December 31, 2025).
Stocks
Our outlook for 5-year stock market returns is 4-6% per year (or 20–35% cumulative), which is below the historical average for long-term equity returns. Stocks continue to trade at elevated levels. Additionally, global markets have become increasingly concentrated in U.S. mega-cap companies, making declines in these stocks more impactful on global returns than in past years.
The Founders Fund does not own the market. It owns a diversified mix of stocks that are profitable and trading at better valuations than many areas of the market, but is not immune to bouts of market turbulence.