Tom Bradley makes no apologies for liking the simple life. “I believe in keeping things simple,” he says. “I’m the kind of guy who goes into Baskin-Robbins and orders vanilla ice cream.”
But, in his book, adhering to simplicity doesn’t mean sacrificing reward. In fact, as far as the Vancouver-based veteran mutual fund executive is concerned, simplicity and reward can be as complementary as ice cream and sugar cones. To prove his point, he recently launched a new mutual fund company — Steadyhand Investment Funds Inc.
If Bradley’s name rings a bell, it should. Bradley, 52, is former CEO of Vancouver-based star money manager Phillips Hager & North Investment Management Ltd. He left that firm in 2005 after a 14-year stint and, on April 10, officially hung out the shingle at his new Vancouver fund boutique.
“In a nutshell, I left PH&N to start a company like Steadyhand,” he says. “I’m a creative kind of guy and a builder, so I wanted a little more open field in front of me. I also wanted to be less constrained by the shackles that are part of any large organization.”
Bradley has a great deal of respect for PH&N, and admits there is an element of his former company in his new company. “PH&N left its impression on me, and I hope I left my imprint on it,” he says. “What I took away from PH&N was the notion I learned from Bob Hager that mutual fund fees have to make sense for the client.”
Which is why low fees are a primary feature of Steadyhand, which offers clients a straightforward lineup of five no-load funds, all of which can be purchased directly by individual investors or through third-party dealers and advisors.
While the firm’s management expense ratios are not the lowest in the industry, they are among the lowest for all five types of its offerings: savings (0.65%), income (1.00%), equity (1.35%) global equity (1.70%) and small-cap equity (1.70%).
There is a minimum investment of $10,000 a fund. And Steadyhand has a tapered fee schedule starting at $100,000. Above that level, clients enjoy a 20% fee discount; above $250,000, the discount is 30%. The new company has also set up a loyalty rewards program: when clients have been with Steadyhand for five years, their fees will drop by 7%; at 10 years, their fees will be cut by 14%.
“We’re not the lowest, in terms of fees for small investors,” Bradley says. “But, at some point, we think we should share the economies with our larger and our loyal clients.”
But low fees are only part of the Steadyhand story, he says. The company doesn’t pay commissions or trailers.
“We started this company because I think there’s a niche in the market for investors who don’t need advice on every dollar they have under management,” Bradley says. “There are very few options for these do-it-yourselfers — and this is a niche we think will grow as the baby boomers age.”
Also, Bradley says, he’s “a little disillusioned” with the number and complexity of weath-management products in Canada today, which is why Steadyhand has “boiled things down to the basic essentials.”
The firm’s fund portfolios are what Bradley calls “concentrated,” in that they hold only 15 to 35 securities — unlike many fund portfolios, which can hold 100 or more stocks. Steadyhand Small-Cap Equity Fund, for example, holds only 15 securities, while the largest portfolio, global equity, contains 30 to 35 stocks.
“We’re also using outside experts as subadvisors to work on our funds,” he says. “We’ve picked them because they fit our investment philosophy.”
Vancouver-based Connor Clark & Lunn Investment Management Ltd. looks after both the savings fund and the income fund, while Cranston Gaskin O’Reilly & Vernon Investment Counse of Toronto handles the equity fund. The small-cap equity fund is managed by Wutherich & Co. Investment Counsel Inc. of Montreal. Edinburgh Partners Ltd. of Scotland looks after the global equity fund.
Steadyhand also differentiates itself from many of its peers with an investment philosophy that emphasizes absolute returns rather than orientation to benchmarks.
“Our managers come into work every day to pursue their passion for finding undervalued securities,” Bradley says. “They don’t worry about what the competition is doing or what the benchmarks look like.”
@page_break@Nor are Steadyhand managers constrained by set investment philosophies. “We’re style-agnostic,” is how Bradley describes it. “We’ve picked managers who can go all over the capitalization spectrum. We want our managers to be able to go where they can find value and not feel they have to stay within a certain style box.”
Steadyhand is cutting itself away from the mutual fund herd in others ways, as well. It is placing a greater emphasis on the Internet in reaching clients.
“My partner [chief operating officer Neil Jensen, who followed Bradley from PH&N] is a techie, and our plan is to use the Web as progressively as possible,” Bradley says. “That means connecting with people interactively through our Web site [www.steadyhand.com], our blog and connecting our blog with other blogs.”
Creative use of the Web is evident on the Steadyhand Web site, which shows Bradley interacting with a 720-kilogram grizzly bear. And it wasn’t done by trick digital photography — the two were actually sharing the same studio space.
Bradley also expects sales of Steadyhand funds to be driven at the consumer level. In other words, many clients will either buy the funds directly, or they’ll instruct their dealers or advisors to buy the funds on their behalf. The company already has slightly less than $22 million in assets under management.
“So, our selling at this point is to the end-user,” he says. “But we expect that dealers will add a commission or some kind of fee for holding a Steadyhand fund for a client; if they’re providing advice or administration, that’s fair.”
Bradley is confident he can also connect with the marketplace through the regular column he writes for the Globe and Mail.
And he’s confident his eight-member staff can make Steadyhand stand out in Canada’s crowded mutual fund sector.
“We’re going to be a small guy, but we’re going to be a pretty noisy small guy,” he says. “I’ve been quoted as saying the industry is fat and out of shape. I say that because I think many of its funds have lost focus and become cumbersome.
“That’s another reason we started this company,” he adds. “We want to help change Canada’s mutual fund landscape so inves-tors know there are other options. There’s a disconnect out there that our company wants to redress.” IE
Steadyhand cuts itself away from the herd
New Vancouver-based mutual fund firm offers low fees and loyalty rewards
- By: Brian Lewis
- August 28, 2007 August 28, 2007
- 11:20