Despite a recent bout of underperformance, the
Steadyhand Income Fund has been one of the best fixed-income-focused balanced funds over the
long-term. For the five years ending Nov. 30, it posted an average annual
compounded rate of return of 4.7%, outpacing most of its peers. Looking out
further, over a 10-year period, it delivered an annualized average 6.1%,
placing it in the first quartile of performance and making it one of the
top funds in the category. The fund is a proven performer, having garnered
the FundGrade A+® Award
in 2013 and 2016.
Subadvised by Connor Clark & Lunn, and managed by Brian Eby, the fund
has a target asset mix of 75% bonds and 25% high-yielding equities. This is
not static, and changes based on the manager’s outlook.
On the bond side, the manager is flexible, and invests in governments or
corporate bonds, depending on where the best opportunities are. Over the
past two years, the manager has increased the quality of the portfolio,
which has seen it shift from overweight in corporates, to about 62% federal
and provincial government issues. The manager can also access high yield
bonds through the
CC&L High Yield Bond Fund. The managers currently have a 2% weighting in the CC&L fund, which is
conservatively positioned, with half invested in investment grade and half
in high yield bonds.
On the equity side, given the manager’s focus on yield, the fund holds a
lot of financials, REITs, telcos, and consumer defensives. As a result, the
underlying dividend yield was well above the index and peer group. It is an
all-cap portfolio, meaning the fund can invest in companies of any size,
although they favor large caps. A consequence has been a higher
interest-rate sensitivity in the equity sleeve. CC&L has been reducing
this, but it remains a bit high.
Recent performance has lagged. Some of that can be attributed to the higher
government bond exposure, and the lack of foreign content. The fund has
very little exposure to foreign stocks, which have outpaced Canadian
equities of late.
Still, given the investor focus, team, track record, low cost, and
disciplined investment process, this remains an excellent long-term pick.
Steadyhand Income Fund
Cdn Fixed Income Balanced
FundGrade A+ Awards:
Low to Medium
Brian Eby since February 2007
SIF120 (no load)
Dave Paterson, CFA, is the Director of Research, Investment Funds for
D.A. Paterson & Associates Inc., a consulting firm specializing in providing research and due
diligence on a variety of investment products. He is also the publisher
Dave Paterson’s Top Funds Report,
offering regular commentary and in-depth analysis of Canada’s top
investment funds. He uses a unique analytical approach to identify
funds with strong, risk-adjusted returns, and regularly publishes his
insights and analyses in Fund Library.
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before investing. Mutual funds are not guaranteed and are not covered by
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amount of your investment in the fund will be returned to you. Fund values
change frequently and past performance may not be repeated. No guarantee of
performance is made or implied. This article is for information purposes
only and is not intended as personalized investment advice.