| Fund Company | RBC Global Asset Management |
| Fund Type | Canadian Focused Equity |
| Rating | A |
| Style | Value |
| Risk Level | Medium |
| Load Status | No Load / Optional |
| RRSP/RRIF Suitability | Excellent |
| TFSA Suitability | Excellent |
| Manager | James O’Shaughnessy since November 1997 |
| MER | 1.55% |
| Code | RBF 550 – No Load Units
RBF 775 – Front End Units RBF 128 – Low Load Units |
| Minimum Investment | $500 |
Analysis: Like the other O’Shaughnessy Funds, the RBC O’Shaughnessy Canadian Equity Fund uses a quantitatively driven stock selection process that is highlighted in the manager’s book “What works on Wall Street”. Essentially the manager employs various screens looking for stocks that have a history of above average sales, above average trading value and above average cash flow. The manager will then pick the highest ranked stocks for inclusion in the portfolio on an equally weighted basis.
The biggest difference between this fund and the RBC O’Shaughnessy All Canadian Equity Fund, is this offering can hold up to 30% invested outside of Canada. At the end February, 20% was invested abroad. All foreign currency exposure is fully hedged, which can either add or subtract from performance, depending on how the Canadian dollar moves.
The end portfolio is very well diversified, holding more than 150 names. The top ten make up just under a third of the fund. Looking at the current sector mix, it is dramatically underweight in energy and financials, with an overweight in consumer and industrial names.
Performance, particularly recent performance has been very strong. In 2013, it gained nearly 32%, handily outpacing the index and the peer group. Year to date, performance has lagged, largely due to the underweight in energy and materials.
The volatility has been above average. Despite this, its downside participation is comparable to the index, meaning it tends to move in step with the index when the market is down. In rising markets, the fund tends to outpace the index.
In reviewing the model’s performance in other regions, I have found that it tends to be early in making stock calls, which helps to explain the above average volatility. I expect that this will continue into the future.
Considering the above, this is a great core equity fund for those investors who are comfortable taking on a higher level of volatility risk. I expect that over the long term, it will continue to deliver above average returns with above average risk.