| Fund Company | Steadyhand Investment Funds Inc. |
| Fund Type | Canadian Focused Small / Mid Cap |
| Rating | B |
| Style | Small Cap Blend |
| Risk Level | Medium High |
| Load Status | No Load |
| RRSP/RRIF Suitability | Good |
| TFSA Suitability | Good |
| Manager | Wil Wutherich since February 2007 |
| MER | 1.78% |
| Code | SIF 150 – No Load Units |
| Minimum Investment | $10,000 |
Analysis: As the name suggests, the Steadyhand Small Cap Equity Fund invests in a portfolio of small and mid cap companies. Manager Wil Wutherich uses a bottom up, growth tilted approach to build a concentrated portfolio that looks nothing like the fund’s index. When he invests, he doesn’t feel that he is simply buying a stock. Instead, he believes he is buying a company.
He looks for companies that have promising prospects and are expected to deliver high relative earnings growth, but are trading at a reasonable valuation. All of the companies in the portfolio are showing some level of fundamental growth, be it revenues, earnings, or cash flows. A typical company in the fund will be a simple, repeatable business that is easy to understand. It will have an experienced management team that has significant ownership interests in the business and a strong balance sheet.
At year end, the fund held 16 stocks and was 80% invested in Canadian stocks, 20% in U.S. stocks. It held 11% in cash, while energy, industrials and technology made up 72% of the fund. Of late, he has been increasing his exposure to energy stocks, where a few interesting opportunities have been found.
It is very underweight in base metals and mining stocks. Given the manager’s emphasis on earnings and cash flow, this is not surprising. One consequence of this is that the fund will lag the markets when resources are hot, with 2009 being a prime example. That year, the BMO Canadian Small Cap Index rose by nearly 70% while the fund was up by only 15%. Another byproduct of his focus on more mature companies is that the fund’s volatility will likely be lower than many other funds in the category.
Despite gaining more than 17% in 2012, the manager believes that all of the holdings are still trading at a discount to their estimate of fair value.
Costs are reasonable with an MER of 1.78%, which is below the category average. Given that there is no embedded advisor compensation, this lower cost is to be expected.
We like the fund for those looking for small / mid cap exposure that is uncorrelated to the broader market. A drawback is that there is a $10,000 minimum investment and many discount brokers and investment dealers do not carry the fund.