The fund finished 2017 with a first-quartile return of 11.18%, outpacing
both the S&P/TSX Composite Index, and the category average. Managers
Doug Raymond, and
David Tron keep the portfolio reasonably defensive, carrying a higher level of cash,
combined with an overweighting in reasonably-valued financial, energy, and
technology holdings. At the end of December, the fund held 7% in cash, 54%
in Canadian equity, and 36% in U.S. equity.
Top holdings recently included
Royal Bank of Canada (TSX: RY),
Bank of Nova Scotia (TSX: BNS),
Toronto-Dominion Bank (TSX: TD),
Brookfield Asset Management Inc. (TSX: BAM.A), and
Bank of Montreal (TSX: BMO).
It is also overweight technology, with exposure to many industry
Alphabet Inc. (NASDAQ: GOOGL),
Apple Inc. (NASDAQ: AAPL), and
Microsoft Corp. (NASDAQ: MSFT). Value names made a comeback in the past few months, helping buoy fund
performance in the fourth quarter.
Longer-term return numbers also look decent, with the fund delivering a
5-year average annual compounded rate of return of 11.6%, while the
S&P/TSX Composite gained 8.6%. The U.S. holdings contributed positively
to this return, as the S&P 500 gained 15.3% in Canadian dollar terms.
While the returns have been strong, what impresses me more is the lower
volatility and stronger downside protection. With 3-year average standard
deviation of 7.3%, volatility has been lower than both the index and peer
group. Capital protection has also been excellent, with the fund capturing
less than half of the market drawdowns. Portfolio valuation remains
attractive compared with its peers.
Looking ahead, I expect this fund to continue to deliver average or better
returns, with lower volatility and stronger capital protection in down
markets. During periods when the market rewards higher beta names, this
fund may lag. However, as the markets return to a more normalized
environment, I expect the fund to outperform.
RBC North American Value Fund
RBC Global Asset Management
Canadian Focused Equity
FundGrade: A (December 2017)
FundGrade A+ Awards: 2012, 2013, 2017
Large Cap Blend
Prospectus Risk rating:
Low to Medium
Stu Kedwell since May 2005; Doug Raymond since May 2005; David Tron
1.97% (front end units)
RBF766 (Front-end load)
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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only and is not intended as personalized investment advice.