by Scott Ronalds

Our two best-performing funds of late have been our Global Equity Fund and our Small-Cap Equity Fund. Our Global Fund is up 17.8% over the past 12 months (as of September 30) and our Small-Cap Fund is up 11.6%. Both are running well ahead of their respective indices.

But we don’t focus on short-term numbers at Steadyhand. I felt dirty just writing this last paragraph. My point is to show that performance comes in spurts and cycles. The two above-mentioned funds had underperformed prior to the period referenced. Our Equity Fund, instead, had been pulling the performance wagon.

Over periods of one or two years, performance can be totally random. It’s less a function of a manager’s skills and more a function of investor sentiment, luck and other arbitrary factors. We need to assess funds and managers instead over periods of five, ten, fifteen years.

In a well-diversified portfolio, different funds will pull the performance wagon at different times. Our job as investors is to keep in mind that not all parts of our portfolio will be running at the same clip. We don’t want to shower too much praise on our stud horses, and we want to feed our tired ones.

Right now, our fixed income horse is in the barn while our global equity horse is in the winner’s circle. It’s important to not get too low or high on either one. Rather, it’s a good time to make sure your asset mix is in line with your targets (which may require some rebalancing) and keep your eyes on the longer trail ahead.

Management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. The indicated rates of return are the historical annual total returns including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns.