Managed by the team of
of RBC Global Asset Management,
RBC North American Value Fund
invests in a mix of Canadian and U.S. companies that are attractively
valued, fundamentally sound, and that offer above-average returns on
capital. Their disciplined investment process has paid off, as the fund is
Fundata FundGrade A+® Award
The managers use a multi-stage portfolio construction process that
incorporates both quantitative screening and fundamental, bottom-up
The first stage in their process is a series of quantitative screens that
weed out the undesirable companies in their selection universe. The team
then conducts a fundamental analysis on each of the companies along with a
series of scenario analyses, looking at a wide range of possible outcomes
for each stock. Stocks are also evaluated using a two-factor matrix model
that evaluates earnings projections relative to valuation.
Top holdings as of the end of May included
Toronto-Dominion Bank (TSX: TD),
Bank of Nova Scotia (TSX: BNS),
Royal Bank of Canada (TSX: RY),
Brookfield Asset Management (TSX: BAM.A), and
Suncor Energy Inc. (TSX: SU). Cash was at 4.7% of portfolio weight.
For the second quarter, the fund gained 4.9%, outpacing most of its peers,
but trailed the S&P/TSX Composite’s 6.8% return. At present, portfolio
valuations look a bit rich for a value fund. However, when you factor in
the expected growth rates of the underlying holdings, it is much more
reasonably valued. From a sector standpoint, the fund is overweight
financials and energy, and is modestly underweight information technology
The managers concede that in absolute terms, stock valuations are high, but
note that when compared with fixed income, they are reasonable. At this
stage in the cycle, it will take strong earnings growth to propel the
market higher, which explains the fund’s tilt towards higher growth sectors
in the market.
This remains a strong pick for those looking for a mix of Canadian and U.S.
equities for the long-term.
RBC North American Value Fund
RBC Global Asset Management
Canadian Focused Equity
FundGrade A+ Awards:
2012, 2013, 2017
Large Cap Blend
Stuart Kedwell since May 2005; Doug Raymond since May 2005
RBF554 (No 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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amount of your investment in the fund will be returned to you. Fund values
change frequently and past performance may not be repeated. No guarantee of
performance is made or implied. This article is for information purposes
only and is not intended as personalized investment advice.