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FundGrade A+ Award winner Steadyhand Income Fund an excellent long-term pick
10/17/2018 10:56:07 PM
HOME : FEATURES : COLUMNS : FundGrade A+ Award winner Steadyhand Income Fund an excellent long-term pick
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DUE DILIGENCE
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By Dave Paterson  | Wednesday, December 13, 2017


 



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
Fund company:
Steadyhand Investments
Fund type:
Cdn Fixed Income Balanced
FundGrade Rating: B (November)
FundGrade A+ Awards: 2013, 2016
Style: Blend
Risk level: Low to Medium
Load status: No load
RRSP/RRIF suitability: Excellent
Manager: Brian Eby since February 2007
MER: 1.04%
Fund code: SIF120 (no load)
Minimum investment: $10,000

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 of 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.

Notes and Disclaimer

© 2017 by Fund Library. All rights reserved. Reproduction in whole or in part by any means without prior written permission is prohibited.

Commissions, trailing commissions, management fees and expenses all may be associated with fund investments. Please read the simplified prospectus before investing. Mutual funds are not guaranteed and are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer. There can be no assurances that the fund will be able to maintain its net asset value per security at a constant amount or that the full 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.

 

 
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