RBC Strategic Income Bond Fund just passed its three-year anniversary and has over that time delivered
strong results for investors, earning a Fundata A+™ Award for 2016,
FundGrade™ A-Grade Rating in the process. The fund’s one-ticket bond portfolio consists of a
number of bond funds offered by RBC, providing exposure to investment-grade
corporate bonds, high yield bonds, emerging market debt, and convertible
The underlying funds are high quality offerings, with the cornerstone,
RBC Global Corporate Bond Fund, having a place on my own
Recommended List of Funds. In addition to the bond exposure, the fund also has a 10% weight in
emerging market currencies and short-term interest rates.
Sarah Riopelle is responsible for managing the mix of the funds, with input from
Dagmara Fijalkowski and the RBC Global Asset Management Investment Policy Committee. While Ms.
Riopelle has some tactical discretion over the fund mix, it is kept within
10% of the fund’s neutral mix. Any tactical shifts are expected to be
incremental, as RBC believes that further allowances would create too much
risk relative to the overall potential return.
Returns have been strong, outpacing its peers with a 6% average annual
compounded rate of return for the three years ending May 31. With a 3-year
average standard deviation of 4.2% for a Fundata Volatility ranking of
2/10, the fund’s volatility has been significantly lower than the
high-yield index and its peers.
The fund pays a modest distribution of $0.03 per month, which translates
into an annualized yield of approximately 3.4%. According to RBC, the
yield-to-maturity of the portfolio is just under 3.3%. Costs are about
average, with an MER of 1.85%.
The results for this fund have thus far been encouraging. I will continue
to watch it closely, and for now, see it as a solid way for investors to
access non-core bond exposure in a well-diversified way.
RBC Strategic Income Bond Fund, Series A
RBC Global Asset Management
High Yield Fixed Income
Fundata A+™ Award:
Fund of Funds
Sarah Riopelle since August 2013
Dave Paterson, CFA, is the Director of Research, Investment Funds for
D.A. Paterson & Associates Inc., a consulting firm specializing in providing research and due
diligence on a variety of investment products. He is also the publisher
Dave Paterson’s Top Funds Report,
offering regular commentary and in-depth analysis of Canada’s top
investment funds. He uses a unique analytical approach to identify
funds with strong, risk-adjusted returns, and regularly publishes his
insights and analyses in Fund Library.
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