If you have any doubt as to the value of advisors to asset management firms, RBC Global Asset Management’s latest move should dispel that doubt. On Aug. 3, RBC said that under a new Cornerstone Investor Program it is cutting total expenses on four of its funds by 39% to 44% for existing and new shareholders over the next 27 months. And certain advisors who invest $10 million or more in those RBC GAM funds will receive what Matthew Appelstein of RBC calls “white glove client service.”
Moreover, Appelstein, head of U.S. sales and distribution for RBC Global Asset Management, was refreshingly direct in an Aug. 4 interview about the reasons for the expense cuts and special services. “Everything we’re doing here today is part of our long-term strategy to grow the U.S. business,” he said. “We’re in this for the long run,” he said, adding that “over the next 3-5 years, U.S. retail will be the biggest opportunity in the world.”
What does that “white glove” service include for advisors who invest $10 million or more? Appelstein said it involves “getting access to our people, our tools and our knowledge,” similar to what “institutional investors with separate accounts” get from RBC GAM. That includes research and risk- and portfolio-management tools. Moreover, he said that for those advisors who get those institutional services, “we’re going to ask them what they need.”
The four funds all have long track records in RBC GAM’s traditional institutional market in the form of separate accounts and private vehicles, said Appelstein, and feature “instititutional-level risk management.” The ’40 Act, U.S. dollar-denominated funds are available on multiple broker-dealer, IBD and RIA custody platforms in retail and institutional share classes. The funds are:
RBC Emerging Markets Equity Fund (REEIX), an $8.4 million fund launched Dec. 20, 2013, whose shareholders will see a total expense cut of 39%. The fund is managed by RBC GAM’s London-based EM equity team, headed by Senior Portfolio Manager Philippe Langham, which manages more than $2 billion in its various EM equity strategies. According to RBC GAM’s SEC filing, that translates into a cut in the fund’s institutional share class annual operating expense ratio from 4.65% to 0.725%.
RBC Mid Cap Value Fund (RBMVX), with a five-star overall Morningstar rating and $5.2 million in assets, whose shareholders will see a 39% cut in total costs. According to its filing, that translates into a cut in the fund’s institutional share class annual OER from 3.71% to 0.55%.
RBC BlueBay Emerging Market Corporate Bond Fund (RBECX), which has a four-star Morningstar rating and $20.5 million in assets. The fund, whose shareholders will see a 43% total cost cut, is subadvised by London-based BlueBay Asset Management. According to its SEC filing, that translates into a cut in the fund’s institutional share class annual OER from 1.68% to 0.575%.
RBC BlueBay Global High Yield Bond Fund (RGHYX), which also has a four-star Morningstar rating and $30 million in assets; its shareholders will see a 44% cut in total costs. According to its filing, that translates into a cut in the fund’s institutional share class annual OER from 1.25% to 0.45%.
The expense cuts are in effect until Oct. 31, 2017. Appelstein said “we’re giving people 27 months, and then another 18 months” before the expenses can climb back to what they were prior to the Cornerstone program’s launch.