Since 1960, as a specialized, non-profit organization, Tradex has been dedicated to managing the financial interests of Canadian public servants and their families. Tradex was founded through the efforts of five members of Canada’s Foreign Service who wanted to invest while posted abroad, and they proposed to engage a professional investment counsel to manage the portfolio in order to avoid any conflict of interest. The first Tradex no-load mutual fund was created in April 1960.
Tradex has been providing sound, professional financial advice to Canadian public sector employees and their families for over 50 years. Tradex expanded its offering of investment products, and today offers a whole range of investment options based on the needs and goals of each individual investor. The Tradex team of six offers over 80 years of combined experience and provides quality, unbiased investment advice to nearly 4,000 Tradex members. The firm offers a bond fund, Canadian focused equity, global equity fund, high yield daily interest savings account, and serves as a mutual funds dealer which allows members the access to thousands of third-party mutual funds.
The Canadian Business Journal spoke with Blair Cooper, President and CEO, and Brien Marshall, COO, about the unique nature of this Ottawa-based service.
“The main difference that makes Tradex unique is that both our dealer and our funds are overseen by an independent Board of Directors, and we operate on an ‘at cost’ basis. With our three funds we charge a management fee (0.6 or 0.7 per cent), and we are a mutual funds dealer for Ontario, Quebec, and B.C., meaning that our members can buy and hold almost all mutual funds available in Canada,” says Cooper.
Funds and banks generally have separate shareholders to whom dues are due. This is not the case when it comes to Tradex. Tradex’s only allegiance is to members invested through Tradex. To achieve this effectively, all Tradex employees are salaried, and do not receive any commissions which ensures that the investors receive unbiased advice at all times.
Tradex’s goal is to keep costs low and to pass those savings onto its members. The company rebates any surplus revenues back to the Tradex funds, hence increasing investment returns. “We operate similarly to a co-op or a mutual insurance company. We are owned by our investors. For example, our largest fund’s (Tradex Equity Fund) MER (Management Expense Ratio) was 1.21 per cent, while the industry average in this category is 2.5 per cent,” says Cooper.
Besides Tradex Equity Fund, whose returns for the past 12 months reached 16.80 per cent, Tradex also offers Tradex Bond Fund which achieved a return of 1.69 per cent for the past 12 months with a 2012 MER 1.07 per cent, and Tradex Global Equity Fund which achieved return of 29.34 per cent for the past 12 months with a 2012 MER at 2.26 per cent.
Created in 1960, Tradex Equity Fund is one of the oldest mutual funds in Canada, and serves investors who seek long term growth, with a range of 65 to 85 per cent of the Fund invested in a diversified portfolio of common shares of Canadian companies and the rest invested in a diversified portfolio of U.S. and international stocks.
The Tradex Bond Fund was created in 1989 for investors seeking preservation of capital and a steady income stream. This portfolio is invested primarily in a diversified portfolio of investment grade Canadian bonds, and up to 30 per cent of the portfolio may be invested in income producing equity securities, such as common shares of Canadian companies that pay dividends, real estate investment trusts, preferred shares, and income trusts.
Tradex Global Equity Fund was created in 1999 (a successor of a previous fund with different name and objectives) and serves investors seeking long term growth through investing in global closed-end fund companies whose investments are principally in a diversified portfolio of equity securities of issuers that can be based in any country.
“We hire advisors to run our investments, so our Equity Fund is run by Phillips,Hager & North, a division of Royal Bank Global Asset Management Inc., our global fund is run by City of London Investment Management Company Limited, and our Bond Fund is managed by Foyston, Gordon & Payne Inc.,” says Cooper.
As to the state of general market conditions, according to Tradex, many retail investors have not fully appreciated how much things have improved since the market bottom in March 2009. As of the end of October 2013, Tradex Equity Fund Limited increased by 111.00 per cent, Tradex Bond Fund by 23.53 per cent, and Global Equity Fund by 125.23 per cent.
While the markets have improved significantly since they bottomed in the spring of 2009, the investing public still remains skeptical about the macroeconomic issues that can be seen in the media. However, every professional investor knows that there are always opportunities for growth regardless of the market environment.
“Part of our job is to separate the noise of the mainstream news (for example the recent budget issues in the U.S.) from the reality. The markets have generally ignored all this negative publicity. If you invest according to the headlines, chances are you may react incorrectly. It’s our responsibility to inform and advise our clients on how to rise above the noise,” says Marshall.
With its co-operative nature and salaried professionals serving those invested with the firm, the Tradex interests fully align with those of the investors, and that’s what has kept the company around for over half century, and the management does not see why this should change in the decades to come.