Founders Fund

December 31, 2023

Fund Overview

  • The Founders Fund is a balanced fund with a target asset mix of 60% stocks and 40% fixed income. It gains this exposure from investing in Steadyhand’s other funds.
  • Tom Bradley (Steadyhand Chair and co-founder) manages the fund along with Chief Investment Officer Salman Ahmed. They have considerable scope to adjust the portfolio although without extremes in valuation and investor sentiment, their bias is to stay near the target mix.

Portfolio Specifics

  • The Founders Fund had a strong finish to 2023 driven by rising stock prices. The fund was up 8.6% for the year, marking the 9th positive return in 11 years. The fund benefited from strong performances by the Small-Cap Equity Fund and Income Fund.
  • We don’t make big or sudden moves to the fund’s asset mix, but instead make gradual changes based on bond and stock valuations, market sentiment (a contrarian indicator of value), and our fund managers’ views.
  • Founders was fully invested in stocks throughout the year. It started with a weighting of 65% in January (as a percentage of total assets) and finished at 60%, which is right on its long-term target. As the year progressed, our projected 5-year return for stocks (our preferred time frame) came down slightly as prices rose more than company profits.
  • As we noted throughout the year, higher interest rates improved the outlook for fixed income securities. Reflecting this, the bond component of the portfolio (via the Income Fund) was increased to 33% and made a solid contribution with a 7.4% return in 2023.
  • We remind clients that Founders’ asset mix is important, as are the adjustments we make, but returns are primarily driven by the performance of the underlying funds. It’s through these 6 funds that Founders owns a mix of bonds and stocks across a wide range of industries, geographies, and currencies.
  • The largest transactions during the quarter in the underlying funds included new holdings in CGI (Canada), TMX Group (Canada), and Monotaro (Japan); and the sale of Brookfield Renewable (Canada), HDFC Bank (India), and Kubota (Japan).

Positioning

  • Yields on fixed income securities are attractive again and stock market valuations are reasonable in a historical context, which means both components of the fund (stocks and bonds) will contribute to returns in the years ahead.
  • The fund is closely mirroring its target asset mix. There are currently no extremes in the indicators we look at prompting us to deviate meaningfully.

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Important information about the Steadyhand funds is contained in our Simplified Prospectus. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated.