A British Institutional Shop Powers Four New RBC Funds
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Thursday, February 02, 2012

A British Institutional Shop Powers Four New RBC Funds

RBC Global Asset Management [profile] just launched four new U.S. mutual funds by the distribution team Matthew Appelstein is hiring. Today the Minneapolis-based U.S. arm of the Canadian bank's asset management business unveiled a new suite of institutional, fixed income funds powered by BlueBay Asset Management, a British fixed income and alternative asset manager that RBC bought in 2010.

In keeping with RBC GAM's mutual fund business's institutional focus here in the U.S, the new RBC BlueBay funds -- Emerging Market Corporate Bond (RBECX), Emerging Market Select Bond (RBESX), Global Convertible Bond (RGCBX) and Global High Yield Bond (RGHYX) -- all offer institutional shares only, with a $1 million minimum investment requirement. RBC GAM now offers 13 U.S. mutual funds, including three money market funds. It boasts about $250 billion in assets worldwide.

Mike Lee, CEO of RBC GAM in the U.S., told that institutional clients need more emerging markets and fixed income products right now.

"These four happen to strategies that U.S. clients are looking for," Lee said. "They tend to be very under-represented in portfolios."

"There are times in the investing cycle when dull is good," CEO Hugh Willis told, responding to the cliche that bonds are somehow less exciting than equities. "Credit is likely to be the best risk-adjusted method of investing for the majority of investors."

As for BlueBay, Willis confirmed that his firm mostly does institutional work separate accounts and the like, mostly outside the United States. So, this move simultaneously brings BlueBay into the U.S. and into the mutual fund business.

"They have a long track record in these categories [of fixed income]," Lee said, noting that BlueBay works with more than $40 billion in assets.

Willis confided that BlueBay's institutional, separate account, global high yield strateg is one of only two high yield strategies in the world that S&P rates AAA. Now BlueBay is bringing that strategy to the mutual fund world.

"There's no reinvention of the wheel here," Willis said, adding that BlueBay has been running the different strategies behind the new funds for three to ten years each. "Only the vehicle is new."

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