Investment Philosophy
Our investment philosophy is characterized as a portfolio approach to stock selection within strategic, long-term asset allocation. We subscribe to a disciplined process that is based on industry weighting, stock selection and an unwavering sell discipline. The success of this technique over time is reflected in its compound annual growth rate of 18% since inception in mid-1984, compared to 9.5% for the S&P/TSX over the same period.
Benefits of Segregated Portfolio Management
We believe that segregated portfolio management offers several advantages, especially when compared to pooled investment vehicles such as mutual funds. Segregated portfolios can be designed to suit the particular needs and objectives of our clients and offer greater flexibility in terms of asset allocation. Segregated portfolios offer lower fees and greater clarity - each position held in the account is a stock that can be followed and each position has its own cost base, eliminating embedded capital gains typical of pooled investment vehicles such as mutual funds. Finally, a segregated portfolio approach allows clients to fulfill a particular socially responsible mandate should they wish to do so.
Investment Strategy
The underlying investment strategy is a combination of top-down economic analysis and bottom-up company screening.
Click here to view the Guided Portfolio Discipline Approach
Sector Allocation
The RBC Investment Strategy Committee forecasts key macroeconomic variables such as expected interest rate moves, economic growth, earnings growth, and prevailing valuations of equity markets on a quarterly basis. From the analysis an over-weight or under-weight is determined for each major sector, and companies are then selected from each sector to satisfy the determined weighting.
Company Selection
Each company selected is assigned a score based on fundamental, technical and quantitative analysis. Twenty stocks that score well across the board and that have the best return potential given the industry exposure constraints outlined are selected for the portfolio. In this way, only stocks that are most attractive among their peer group are selected.
Sell Discipline
Positions are rebalanced as the RBC Investment Strategy Committee's analysis determines changes in sector allocation, as a company's score deteriorates or as market prices fluctuate and positions exceed recommended weighting. In this way the portfolio adapts to a changing environment effortlessly.
Investment Style
Both a Canadian Segregated and U.S. Segregated Portfolio are available. An International Segregated Portfolio is also available.
