A choice of:
1. Flat base fee (no performance fee); or
2. Lower base fee + performance fee as illustrated below.We do not charge any other fees.
Our Services
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Investor partnersIndividuals, businesses, trusts
Investor partners' primary residenceWe are registered with the Ontario Securities Commission ("OSC"). If your primary residence is outside of Ontario, please contact us to discuss options.
Accounts we offerCash and registered accounts (e.g. TFSA, RRSP, RESP, LIRA, etc.)
Minimum investment$500,000 per single account (e.g. cash, TFSA or RRSP). Please contact us to discuss your specific circumstances - we will do our best to find a way to work together.
StructureYour assets will be managed in a Separately Managed Account ("SMA") that will be open under your name at a qualified custodian, who will hold and safeguard your assets, on 42KM's behalf. 42KM will have advisor access to the account and will be able to execute trades and withdraw fees as per our investment management agreement. 42KM will not have the authority to withdraw funds for other reasons. If you'd like additional information on what it means to be a qualified custodian in Ontario, please contact us.
Risk of lossThe value of the investments is not guaranteed and can fluctuate significantly, particularly in the short-term. Investing in global equities comes with a number of risks, including geopolitical, macroeconomic, industry and company-specific. We run a long-term strategy that would not be appropriate for investors with a time horizon of less than 5 years. Industry research and our 24 years of experience show that over the long-term, equities provide attractive risk-adjusted returns.
Investor partner protectionCanadian Investor Protection Fund (CIPF) provides coverage in an unlikely case a custodian becomes insolvent. The coverage is up to $1M combined for all non-registered accounts (cash, TFSA) plus up to $1M combined for all registered accounts.
Legislative and regulatory compliance42KM adheres to all applicable securities laws and manages its business risks in accordance with prudent business practices. Our experienced Chief Compliance Officer (“CCO”) is responsible for overseeing 42KM's compliance, regulations, and industry standards. We have established an effective compliance program to identify and mitigate compliance risks, and ensure 42KM's operations align with legal and regulatory requirements. We keep current on new and emerging legislative and regulatory compliance requirements through professional development, conferences and industry newsletters.
Firm's registration42KM is registered as a Portfolio Manager ("PM"), Investment Fund Manager ("IFM") & Exempt Market Dealer ("EMD") with the Ontario Securities Commission.
Management Fees
For a household with total assets of $3.2M that chooses "Base + Performance" fee option, the base fee on the first million is 125bps, on the next two million 85bps and on the remaining $200,000, 55bps.
Base fees:
Base fees are charged quarterly. They are calculated based on the market value of the total household assets (all accounts combined) at the end of each calendar quarter and are subject to HST. Larger investments are rewarded with lower fees.
Performance fees:
Annual performance fees of 15% above the 6% net return applies only if at year-end:
— Partner's in-year annualized return is at least 6% after fees & expenses; and
— Partner’s lifetime annualized return is at least 6% after fees & expenses.
Performance fees for the year, if applicable, will be charged in January of the following year and are subject to HST.
Since lifetime return is below 6%, no performance fee applies irrespective of the in-year return.
Since both in-year and lifetime returns are above 6%, performance fee applies. The fee is 15% of the difference between the 16% in-year return and the 6% threshold, or 15%*(16%—6%)=1.5%
Tax-deductibility of the fees
Management fees on cash accounts are tax-deductible whereas fees on registered and TFSA accounts are not.
Loyalty reward
After 5 years of continued partnership, base fees decline by 10% (e.g. from 100bps to 90bps). With $500,000 invested for 25 years, this lower fee saves ~$35,000.
Other expenses
Custody and trade execution fees are paid directly to the executing broker/custodian. These fees are competitive and will likely have a negligible impact on long-term returns.
Performance benchmarks
Over the 5-7+ year investment horizon, we aim to outperform the broad global equity indices - in Canadian dollars - after fees and expenses. We look to do this with lower risk versus the market.
We seek like-minded institutional investors - including pension plans, endowments and family offices - for the Enduring Compounders fund. Given our founder's deep experience in the institutional space, we understand the objectives and challenges of asset allocators. In particular, we would be pleased to share how culture-led investing can enhance returns across various asset classes (e.g. Public & Private Equity, Venture, Infrastructure, etc.).
We would be happy to discuss your investment mandate to determine if there is a mutual fit. Please contact Igor Bekker directly.
