| Fund Company | RBC Global Asset Management |
| Fund Type | Canadian Dividend and Income Equity |
| Rating | B |
| Style | Large Cap Blend |
| Risk Level | Medium |
| Load Status | No Load / Optional |
| RRSP/RRIF Suitability | Excellent |
| TFSA Suitability | Excellent |
| Manager | Stu Kedwell since April 2007
Doug Raymond since April 2007 |
| MER | 1.79% |
| Code | RBF 266 – No Load Units
RBF 759 – Front End Units |
| Minimum Investment | $500 |
Analysis: In my conversations with Canadian equity managers, one of the topics that comes up rather often is how challenging it becomes to find suitable investment opportunities as the size of the fund increases. Canada’s market is somewhat small, which makes the performance the team of Stu Kedwell and Doug Raymond have been able to squeeze out of this behemoth even more impressive. At more than $19 million, this is the largest mutual fund in Canada.
Despite this hulking size, it has generated an annualized three year return to the end of August of 14.1%, finishing in the top 25% of the Canadian dividend funds. Even the longer term numbers remain above average. Volatility has been in line with other dividend funds, but is lower than the broader Canadian equity markets.
Looking at the portfolio, it looks quite similar to how you would expect a large cap dividend fund to look. At the end of July, more than 45% of the equity exposure was in financials, with the big five banks all in the top ten holdings. Higher yielding energy names such as Suncor and Enbridge also play a big part of this fund, with energy making up more than a quarter. Portfolio turnover is rather modest, averaging less than 20% in the past few years, keeping the portfolio relatively stable.
Not surprisingly the underlying yield is higher than the broader TSX, however it lags its peer group. This is largely because its size prevents it from taking any meaningful positions in some of the smaller index names that offer more attractive yields.
Quite honestly, the biggest concern I have with this fund is its size. The managers are somewhat limited with this fund, as they may not be able to be as nimble as they could be with a lower asset base. Because of that, I would expect that this will continue to do what it has done for the past several years – deliver slightly above average returns with average risk. If you are looking for a fund that really showcases the manager’s skill set, you may want to take a look at the PH&N Canadian Equity Value or the RBC North American Value Fund.