From a credit quality perspective, approximately 27% of the fund was
investment grade, while 70% was in non-investment grade. Still, the focus
was on high-quality, high-yield names, with only 8% of the holdings with
less than a B credit rating.
The duration was 5.9 years, much lower than the duration of a more
traditional investment grade portfolio. The yield to maturity was also
significantly higher, coming in just shy of 5%.
The recent list of top holdings included focused investment funds as well
has individual bond holdings: iShares J.P. Morgan USD Emerging Markets Bond
Index ETF, BlueBay Emerging Markets Corporate Bond Fund, iShares iBoxx $
High Yield Corporate Bond ETF, SPDR Bloomberg Barclays High Yield Bond ETF,
and Peru 8.75% bond.
The fund is also well diversified geographically, with 35.7% weighting to
the U.S., 21.3% in Latin America, 10.3% in Emerging Asia, 10.2% in Emerging
Europe, and 8.1% in Canada.
With a 1-year gain of 13.1% as of the end of February, this fund has been a
respectable performer, but the longer-term numbers are more impressive,
with consistent above-average performance. It posted a 10-year average
annual compounded rate of return of 6.36% to Feb. 28, compared with 4.6%
for the High Yield Fixed Income category, 5.18% for 5 years versus 4.99%
for the category, and 4.81% for 3 years compared with 3.57% for the
Volatility has been well contained. With a 3-year standard deviation of
4.93% for a FundData volatility ranking of 2/10, the fund has been less
volatile than the index and in line with its peers. The downside protection
offered has also been impressive, which is largely a result of the fund’s
significant exposure to emerging market bonds.
Management is active in employing their process and tends to be more active
in volatile periods. Still, on balance, turnover has been modest, averaging
just under 60% for the past five years.
While not my top pick in the high-yield space, I like the diversified
portfolio of the RBC Global High Yield Fund and the active management
approach used. I wouldn’t use it as a core fixed-income holding, but it
could be a nice addition to an otherwise well-diversified portfolio.
RBC Global High Yield Bond Fund
RBC Global Asset Management
High Yield Fixed Income
Fundata FundGrade A+ Award:
Jane Lesslie since July 2003; Frank Gambino since July 2003
RBF579 (no load)
Minimum initial investment:
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
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.
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only and is not intended as personalized investment advice.