RBC Global Asset Management Extends Institutional Pricing and Service Model to Select Mutual Funds

Aug 03, 2015, 07:30 ET from RBC Global Asset Management (U.S.)

New RBC Cornerstone Investor Program offers greater value through lower fees and enhanced services

MINNEAPOLIS, MN, Aug. 3, 2015 /PRNewswire/ - RBC Global Asset Management U.S. (RBC GAM) today introduced an innovative package of significantly lower fees for U.S. mutual fund investors and professional services to intermediaries.

The RBC Cornerstone Investor Program
Through this initiative - the RBC Cornerstone Investor Program - RBC GAM is applying an institutional seed pricing model to all shareholders in four of its mutual funds and enhanced services to select intermediaries whose clients invest in those funds.

Pricing and Service
Under the Program, all shareholders in the participating funds will benefit from a reduction in total expenses of approximately 39% to 44%. This reflects an adjustment in contractual fee waivers equal to 50% of each fund's management fee. This cost reduction applies to all current and new investors, and is effective today through October 31, 2017. Effective November 1, 2017, RBC GAM anticipates that the cost of the funds will be incrementally raised over an 18-month period, to a level equal to or below the pre-Program level.

Also under the Program, a select number of intermediaries whose clients invest $10 million or more in one of the participating funds will receive services akin to those provided to holders of separate accounts available to institutional investors: access to RBC GAM's institutional thought leadership, institutional portfolio and product managers and economists, and proprietary risk and portfolio management tools.

"RBC Global Asset Management has a long track record of serving institutional investors with a focus on service excellence and rigorous investment discipline," said Mike Lee, Chief Executive Officer and Chief Investment Officer of RBC GAM-U.S. "In today's market, investment advisors and their clients are behaving more like institutions. They are looking for proven investment expertise and sophisticated risk management. In response, we have created the RBC Cornerstone Investor Program to bring our proven institutional investment approach and service to additional U.S. mutual fund intermediaries and investors."

Long-Term Strategy
The RBC Cornerstone Investor Program complements the ongoing expansion of RBC GAM's retail service and product infrastructure. By providing an incentive for investors to choose from a selection of RBC GAM mutual funds, including four- and five-star Morningstar rated funds with smaller asset bases, the Program aligns with RBC GAM's approach in the institutional market.

"Expanding in the U.S. mutual fund market is an important part of our global growth strategy," said Matthew Appelstein, Head of U.S. Sales and Distribution, RBC GAM. "The RBC Cornerstone Investor Program is innovative in two focused and deliberate ways to grow the smaller funds in our line-up: it provides intermediaries with services that have not traditionally been available outside of the institutional marketplace, and also applies a fee structure for the four funds that is lower than 90% of their Morningstar peer groups."

RBC GAM's expansion in the U.S. is accelerating. The company recently announced a series of senior level hires, bringing the total number of U.S. distribution, client service and marketing professionals to 62, an increase of 44% over the past three years. RBC GAM has over 150 employees throughout the U.S. including offices in Boston, Minneapolis, New York and Chicago.

RBC GAM has also expanded its product line-up in recent years, including five new mutual funds launched in December 2014. In total, RBC GAM has introduced 14 new funds in the past four years across a variety of different share classes and asset classes.

Funds in the RBC Cornerstone Investor Program
The Program will apply to the following four mutual funds as of August 3, 2015:

  • RBC Emerging Markets Equity Fund
    The RBC Emerging Markets Equity Fund seeks to emphasize quality and long-term growth at a reasonable price and is managed by lead portfolio manager Philippe Langham and the RBC GAM Emerging Markets Equity team. This London-based team is responsible for over $2 billion in assets across emerging markets equity strategies

    The RBC Emerging Markets Equity Fund was previously in the 65th percentile for costs within its peer group; effective today, it sits within the 93rd percentile for costs1. The total cost reduction to shareholders of the fund is approximately 40%.
  • RBC Mid Cap Value Fund
    The RBC Mid Cap Value Fund seeks to provide long-term capital appreciation by investing in equity securities that offer attractive value relative to the overall market. The fund is managed by lead portfolio managers Lance James and Steve Kylander. The management team is responsible for nearly $3 billion in assets across micro cap, small cap and mid cap equity strategies.

    The RBC Mid Cap Value Fund Class I has a 5-star Overall Morningstar RatingTM out of 429 Mid Cap Value Funds as of June 30, 2015, based on risk-adjusted returns. The fund was previously in the 53rd percentile for costs within its peer group; effective today, it sits within the 97th percentile for costs1. The total cost reduction to shareholders of the fund is approximately 39%.
  • RBC BlueBay Emerging Market Corporate Bond Fund
    The RBC BlueBay Emerging Market Corporate Bond Fund invests primarily in fixed income securities issued by companies and financial institutions based in emerging market countries. The fund is sub-advised by BlueBay Asset Management and a 34-person team dedicated to emerging market debt strategies.

    The RBC BlueBay Emerging Market Corporate Bond Fund Class I has a 4-star Overall Morningstar RatingTM out of 246 Emerging Market Bond Funds as of June 30, 2015, based on risk-adjusted returns. The fund was previously in the 25th percentile for costs within its peer group; effective today, it sits within the 99th percentile for costs1. The total cost reduction to shareholders of the fund is approximately 43%.
  • RBC BlueBay Global High Yield Bond Fund
    The RBC BlueBay Global High Yield Bond Fund invests primarily in fixed income securities issued by sub-investment grade companies globally. The fund is sub-advised by BlueBay Asset Management and a 38-person team dedicated to global high yield bond strategies.

    The RBC BlueBay Global High Yield Bond Fund Class I has a 4-star Overall Morningstar RatingTM out of 611 High Yield Bond Funds as of June 30, 2015, based on risk-adjusted returns. The fund was previously in the 38th percentile for costs within its peer group; effective today, it sits within the 98th percentile for costs1. The total cost reduction to shareholders of the fund is approximately 44%.

    For further information about these funds, please visit https://us.rbcgam.com/mutual-funds/default.fs.

About RBC Global Asset Management
RBC Global Asset Management (RBC GAM) is the asset management division of Royal Bank of Canada (RBC), and includes institutional money managers BlueBay Asset Management and Phillips, Hager & North Investment Management. RBC GAM is a provider of global investment management services and solutions to individual, high-net-worth and institutional investors through mutual funds, exchange-traded funds, hedge funds, pooled funds, separate accounts and specialty investment strategies. RBC GAM group of companies manage more than $300 billion USD in assets and have approximately 1,300 employees located across Canada, the United States, Europe and Asia.

Past performance is not a guarantee of future results.

Before investing, you should carefully consider a fund's investment objectives, risks, charges and expenses. This and other information is included in the prospectus, which you can request by visiting https://us.rbcgam.com/mutual-funds or calling 800.422.2766. Please read the prospectus carefully before investing.

Mutual fund investing involves risk. Principal loss is possible. Investing in mid cap, small cap, and micro cap companies involves additional risks, including greater fluctuations in value and lack of liquidity. Each Fund's risks are more fully described in the prospectus. Although the Funds may not generally invest in initial public offerings (IPOs), they may have the ability to. Investments in IPOs typically involve greater price volatility resulting in increased turnover and expenses as well as the potential for taxable gains. The Funds may invest in foreign securities which involve greater volatility and political, economic and currency risks and differences in accounting methods. These risks can be greater in emerging markets. Investments in debt securities typically decrease in value when interest rates rise. This risk is usually greater for longer-term debt securities. Investments in lower-rated and non-rated securities presents a greater risk of loss to principal and interest than higher-rated securities. Derivatives such as futures, forwards, and swaps involve risks different from, and in certain cases, greater than the risks presented by more traditional investments. Non-diversified funds may be more volatile than diversified funds that hold a greater number of securities. Absolute return funds may not achieve their goals and are not intended to outperform stocks and bonds during strong market rallies and may underperform during periods of strong positive market performance.

For each fund with at least a three-year history, Morningstar calculates a Morningstar RatingTM based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund's monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star. (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages.) The Overall Morningstar RatingTM for a fund is derived from a weighted average of the performance figures associated with its three-, five- and 10-year (if applicable) Morningstar Rating metrics.

RBC Midcap Value Fund Class I was rated against the following numbers of U.S.-domiciled Mid-Cap Value Funds over the following time periods: 429 funds in the last three years and 370 funds in the last five years. With respect to these Mid-Cap Value Funds, RBC Midcap Value Fund received a Morningstar Rating of five stars and five stars for the three- and five-year periods, respectively. Morningstar Rating is for the I share class only; other classes may have different performance characteristics. Past performance is no guarantee of future results.

RBC BlueBay Emerging Market Corporate Bond Fund Class I was rated against the following numbers of U.S.-domiciled Emerging Market Bond funds over the following time periods: 246 over the last three years. With respect to these Emerging Market Bond Funds, RBC BlueBay Emerging Market Corporate Bond Fund received a Morningstar Rating of four stars. Morningstar Rating is for the I share class only; other classes may have different performance characteristics. Past performance is no guarantee of future results.

RBC BlueBay Global High Yield Bond Fund Class I was rated against the following numbers of U.S.-domiciled High Yield Bond funds over the following time periods: 611 funds over the last three years. With respect to these High Yield Bond funds, RBC BlueBay Global High Yield Bond Fund received a Morningstar Rating of four stars. Morningstar Rating is for the I share class only; other classes may have different performance characteristics. Past performance is no guarantee of future results.

RBC Global Asset Management (U.S.) Inc. ("RBC Global Asset Management - US" or "RBC GAM-US") is a federally registered investment adviser founded in 1983. RBC Global Asset Management (RBC GAM) is the asset management division of Royal Bank of Canada (RBC) which includes RBC Global Asset Management (U.S.) Inc., RBC Global Asset Management Inc., RBC Global Asset Management (UK) Limited, RBC Alternative Asset Management Inc., BlueBay Asset Management LLP and BlueBay Asset Management USA LLC, which are separate, but affiliated corporate entities. ®/™ Trademark(s) of Royal Bank of Canada. Used under license. © 2015 RBC Global Asset Management (U.S.) Inc.

RBC Global Asset Management (U.S.) Inc. serves as investment adviser for RBC Funds. The RBC Funds are distributed by Quasar Distributors, LLC, an affiliate of U.S. Bancorp Fund Services, LLC.

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1 Data source used in calculations, Morningstar Direct as of 6/30/15.

SOURCE RBC Global Asset Management (U.S.)