Last updated: Jul-20-2018

    
 
High-performance RBC Emerging Markets Equity Fund a five-time FundGrade A+® Award winner
7/23/2018 9:46:11 AM
HOME : FEATURES : COLUMNS : High-performance RBC Emerging Markets Equity Fund a five-time FundGrade A+® Award winner
Show Printable Version Download Plain Text
 
DUE DILIGENCE
Objective research, analysis, and insight on investment funds in Canada from an acknowledged industry expert



By Dave Paterson  | Wednesday, March 21, 2018


 



Given the complexity of the emerging markets, you will likely want an active manager at the helm of your fund than relying solely on a cheap, passively-managed ETF. In the past few years, the RBC Emerging Markets Equity Fund has been one of the more attractive EM funds available. It has delivered above-average returns with less volatility than the index or peers, resulting in better risk adjusted returns. And it is a consistent multi-year winner of the annual FundGrade A+ Award, most recently for performance in 2017.

With valuation levels in developed markets above historical averages, emerging markets look downright cheap in comparison. The S&P 500 was recently trading at an estimated 17 times forward earnings, while the MSCI Emerging Markets Index trades at about 12 times. Further, growth rates in many countries in the developing world far exceed those offered by the more developed countries. Factor in positive demographics, less dependence on commodities, and increasing investor interest and the case for adding emerging markets becomes compelling.

To do this, manager Phillipe Langham and his team look for companies that have a history of delivering high cash flow return on investment. The investment process combines a top-down thematic analysis and bottom-up security selection.

The first thing they determine are the themes that are expected to drive growth in the region. Recent trends have included increased domestic consumption, automation, and infrastructure. Once they know the themes, this helps them narrow their focus to the industries and companies that can benefit. They then begin the detailed fundamental analysis that helps them understand the company, its industry, and most importantly, its cash flow return on investment.

The portfolio will typically hold between 50 and 60 names, and will be diversified across country, sector, and theme. Their approach is long-term and they typically take a five- to ten-year outlook.

Performance has been strong, both on an absolute and risk-adjusted basis, with the fund delivering a 5-year average annual compounded rate of return of 9.7%, and a one-year return of 20.2% as of Feb. 28. Top holdings recently included Naspers Ltd., Taiwan Semiconductor Manufacturing, Housing Development Finance Corp Ltd., Tata Consultancy Services Ltd., and AIA Group Ltd.

The fund’s disciplined approach, its long-term perspective, and consistent top performance makes it one of the more attractive emerging market funds available.

RBC Emerging Markets Equity Fund
Fund company:
RBC Global Asset Management
Fund type:
Emerging Markets Equity
FundGrade Rating: B (February)
FundGrade A+ Awards: 2013, 2014, 2015, 2016, 2017
Style: Large Cap Growth
Risk level: Medium to High
Load status: Optional
RRSP/RRIF suitability: Fair
Manager: Philippe Langham since December 2009
MER: 2.43%
Fund code: RBF798 (Front-end load)
Minimum Investment: $500

Dave Paterson, CFA, is the Director of Research, Investment Funds for D.A. Paterson & Associates Inc., a consulting firm specializing in providing research and due diligence on a variety of investment products. He is also the publisher of Dave Paterson’s Top Funds Report, offering regular commentary and in-depth analysis of Canada’s top investment funds. He uses a unique analytical approach to identify funds with strong, risk-adjusted returns, and regularly publishes his insights and analyses in Fund Library.

Notes and Disclaimer

© 2018 by Fund Library. All rights reserved. Reproduction in whole or in part by any means without prior written permission is prohibited.

Commissions, trailing commissions, management fees and expenses all may be associated with fund investments. Please read the simplified prospectus before investing. Mutual funds are not guaranteed and are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer. There can be no assurances that the fund will be able to maintain its net asset value per security at a constant amount or that the full amount of your investment in the fund will be returned to you. Fund values change frequently and past performance may not be repeated. No guarantee of performance is made or implied. This article is for information purposes only and is not intended as personalized investment advice.

 
:: STOCK SEARCH
Find a Stock

(Leave blank for all)
Symbol   Name
:: MEMBER SERVICES
Username:
Password:
Forgot your password?
Register now
Tech Support
:: USEFUL LINKS
For general inquiries, please email the Librarian.
 
Home |  Features |  Member Services |  Tools |  Funds |  About Us
For any questions or problems with this site, please contact the Librarian.
Page ID: 20:40:1070:00016572:9/12/2017:4:10:55 PM Duration of this visit: 0 sec.