An Overview of RBC Mutual Funds

This guide provides an overview of Royal Bank of Canada’s (RBC) mutual funds. Note that we can’t provide all the details on RBC’s products and can only guarantee accuracy at the time of writing, so we recommend visiting RBC’s site to continue your research.

About Royal Bank of Canada (RBC) mutual funds

The Royal Bank of Canada (RBC) is a Canadian multinational financial services corporation and the largest bank in Canada, in business since 1864. Its head office is in Montreal, Québec. Through Royal Bank Global Asset Management, it offers 297 different mutual funds, that range from money market funds to sector specific funds. The funds vary in terms of risk, based on their investment goals and underlying portfolio composition. It also offers portfolio solutions, exchange-traded funds, and alternative investment solutions.

How do RBC mutual funds work?

RBC mutual funds (the same as any mutual fund) are a pooled investment product. Many investors buy small slices of each mutual fund. The fund manager, in this case RBC Global Asset Management as well as sub-managers such as Blackrock, uses the pooled money from the many investors to build a portfolio by buying underlying stocks, bonds, and other investable assets.

Mutual fund portfolios (like RBC’s) are generally based on investment goals and objectives. Earnings can include dividends, interest and capital gains. Some mutual funds are comprised of investments that track/replicate a stock index, and some mutual funds may include derivatives, futures, hedged funds, and other high-risk investments. That’s why it’s important to read the prospectus and fund facts before you invest in a mutual fund.

RBC offers both active and passive funds. Mutual funds can be “actively managed,” which means the portfolio manager buys and sells underlying stocks, bonds, and other investment products often to achieve the goals of the fund. Mutual funds can also be “passively managed,” which means the portfolio manager follows an index and seeks to replicate its returns. (Passive funds often have “index” in the name of the fund.) The main difference between actively and passively managed funds lies in the investment philosophy. Actively managed funds buy and sell underlying stocks to meet investment goals, whereas a manager of a passively managed fund buys the underlying stocks in the same proportion as the index it is following. Whether actively or passively managed, there are fees, charges, and commissions associated with mutual funds that may reduce your investment returns and can vary, although index funds are typically less expensive. It’s wise to read the fund facts before you buy mutual funds.

Examples of popular RBC mutual funds

All mutual funds, including the funds offered by RBC, fall into a few general categories: money market, bond/income, balanced, equity, global and “other,” including sector-specific and emerging markets. They have different levels of risk, and different fees associated with them. In general, the higher the risk, the more potential for wide variations in the unit price and profit/loss. The mutual fund advisor should take the time to walk through some investment questions so that you can have a portfolio that you are comfortable with.

The chart below includes an example of both actively and passively managed funds and the different categories of mutual fund. The data was compiled on June 29, 2020, by consulting the RBC fund pages. As mutual funds can fluctuate, the information may have changed. Please consult the fund pages for current information.

1. RBC Canadian Money Market Fund (RBF271)

AUM 3,732.78 million | MER .61%| 3 YR Return 1.1% | 5 YR Return .08%

The RBC Canadian Money Market Fund has a minimum initial investment requirement of $500, and subsequent investments of $25. It invests in high-quality, short-term (one year or less) Canadian debt securities, including treasury bills and promissory notes. It is considered low-risk and low-volatility.

2. RBC Bond Fund (RBF270)

AUM 21,863.88 million | MER 1.11% | 3 YR Return 3.6% | 5 YR Return 3.3%

The RBC Bond Fund has been around since 1972 and provides investors with an opportunity to invest in fixed-income securities to provide more opportunity for higher potential return. The initial minimum investment is $500, and $25 for subsequent investments. It has a low risk rating.

3.RBC Canadian Index Fund (RBF556)

AUM 763.18 million | MER 0.66%| 3 YR Return 2.0%| 5 YR Return 2.6%

The RBC Canadian Index Fund is considered a balanced fund that combines cash, fixed income, and Canadian equities to provide both growth potential and some cash stability. Like all index funds, its portfolio composition mimics the index it follows, in this case, the S&P/TSX Capped Composite Total Return Index. This fund is managed by Blackrock Asset Management Canada Ltd, requires an initial minimum investment of $500, and $25 for subsequent investments. It is considered medium risk.

4. RBC Canadian Equity Fund (RBF269)

AUM 1,847.05 million | MER 1.89% | 3 YR Return -1.2%| 5 YR Return 0.8%

Equity funds seek to achieve long-term capital appreciation by investing in high-quality equity securities that offer growth potential. The RBC Canadian Equity Fund’s top holdings include banks,energy companies, Barrick Gold Inc. and Brookfield Asset Management. It requires an initial minimum investment is $500, and $25 for subsequent investments. It is considered a medium risk.

5. RBC Life Science and Technology Fund (RBF274)

AUM 650.26 million | MER 2.1% | 3 YR Return | 5 YR Return

The RBC Life Science and Technology Fund is a sector-specific fund. It invests in U.S. equity companies, including Facebook, Apple, Amazon, Netflix and Google (now Alphabet) (FAANG) stocks, health care companies, and telecommunications services. It is considered medium risk. Even though the fund invests in U.S. Equity, your account and transactions are done in Canadian dollars. It requires an initial minimum investment is $500, and $25 for subsequent investments.

Examples of RBC mutual funds that pay dividends

RBC also has dividend-paying mutual funds that are less risky than an equity or global fund, but may produce better returns than a money market or a bond fund. For some funds, investors can automatically reinvest the dividends to purchase more units. (This data was compiled on June 29, 2020, by consulting the RBC fund pages online.) Mutual funds can fluctuate and the information may have changed. Please consult the fund pages for current information.

1. RBC Canadian Dividend Fund (RBF266)

AUM: 15,700.10 million | MER: 1.76% | 3 Yr Return -0.7% | 5 Yr Return 1.9%

Dividend funds combine the benefits of tax-preferred capital gains with income-producing interest and dividend-paying underlying stocks. The RBC Canadian Dividend Fund’s top holdings include the Canadian banks, CN and CP Rail, as well as energy and investment companies.

2. RBC U.S. Dividend Fund (RBF590)

AUM 4,866.95 million | MER 1.95% | 3 YR Return 6.6% | 5 YR Return 8.0%

The RBC U.S. Dividend Fund invests in top U.S. stocks such as Microsoft, JP Morgan Chase, Mastercard, Apple, and health companies. While it invests in U.S. companies, the fund is in Canadian dollars. The fund is considered medium risk.

3. RBC European Dividend Fund (RBF671)

AUM: 142.32 million | MER .98% | 3 YR Return -3.3% |5 YR Return -0.1%

The RBC European Dividend Fund provides investors with an opportunity to invest in European companies that pay high dividends. It invests in consumer staples, health, financial and mining companies, and is considered medium risk.

How to invest in RBC mutual funds

Step 1: Find a mutual fund advisor

You must purchase mutual funds through a licensed mutual fund advisor. RBC mutual funds are sold through a mutual fund advisor who is licensed in the province where you live. Not everyone in a bank branch is licensed to sell mutual funds. Licensed employees who work for the bank are normally allowed to sell only the bank’s suite of mutual funds. You can learn more about mutual fund licensing and check if an advisor is licensed in Canada through the Canadian Securities Administrators.

Step 2: Determine your investment profile and goals

The mutual fund advisor will go over your investment concerns, goals, and risk tolerance with you, and recommend funds that will suit your investment style best. They may recommend individual funds, or an investment portfolio that has been assembled to meet specific investment objectives. Remember, this is your money, and you can ask as many questions as you need to to understand what you are investing in.

Step 3: Begin investing

You can make a lump sum contribution, or you can set up automatic monthly deposits from your bank account to your investment account. Many funds have a minimum amount required to begin investing, so always check the fund facts or ask the advisor. You can check your investment performance online, and you will receive statements quarterly, semi-annually or annually.

RBC gives you the option of opening a self-directed investment account that allows you to choose your own investments. You request the buys or sells you want to make, and they are processed through RBC. There are different options depending on the type of trading you intend to make. Any trading fees would be in addition to the fund fees and not all funds are eligible. Check the fund facts for eligibility.

RBC also offers index funds that try to replicate equity or bond indices. Index funds are considered “passive” investments, and typically have a lower MER.

Step 4: Keep your goals in mind

When you invest in mutual funds, the value on any given day can vary widely. depending on what the stock market has done. There can be large swings up and down, so it’s a good idea to keep your long-term goals in mind. If you have concerns about what your funds are doing, check with your advisor.

If you want to change your fund direction, or take money out, ask your advisor. Normally you can redeem your units (withdraw your money) from a mutual fund at any time, although it can take 2-3 days to process unless you have a money market fund, which is like a cash account.

The information on this page was compiled by Wealthsimple in June, 2020 by reviewing RBC’s website, press releases, and third-party sites.

A word of warning

Mutual fund accounts are not protected by the Canadian Deposit Insurance Corporation. Investors may lose some or all of their investment. Always read the prospectus to understand what you are investing in, what level of risk is involved, and what fees and charges may be associated with the mutual fund. Please remember that all information provided here is general information and not intended to be advice. Past fund performance may not be indicative of future earnings.