Decent RBC funds portfolio or combination

Discuss your favourite picks, broker, and trading or investment style.
Post Reply
Hogwild
Contributor
Contributor
Posts: 393
Joined: 18 Aug 2015 21:46

Decent RBC funds portfolio or combination

Post by Hogwild »

Hi everyone:

I have a friend who has about 20K in an RBC RDSP. Unfortunately, RBC only allows a minimal choice of investments in their RDSPs. That includes funds only from RBC. I know. I know. But believe me, I would not be able to convince my friend to move to another institution.

Is there a decent performing/lower MER combination of funds, or RBC fund portfolio that is similar in structure to a couch potato type of portfolio? My friend would be sitting on his money for probably 10 years before ever touching it.


Thanks in advance
User avatar
brad911
Veteran Contributor
Veteran Contributor
Posts: 1150
Joined: 29 Jan 2007 16:45
Location: London ON
Contact:

Re: Decent RBC funds portfolio or combination

Post by brad911 »

In my opinion its a no brainer to move it somewhere where it can be self directed. The purpose of the account is to provide for someone with a disability. To pay anything more than the MER on a low-cost index mutual fund (TD E-Series) or an ETF is senseless and you get very little control.
You may find that you're even limited to only the RBC funds, their Wraps and PH&N may not be an option.

Paying a 2% MER on his $20k account would cost him $4k in fees when he goes to touch that money in 10 years. I think that amount of money alone will help him decide to go self directed unless he wants the computer software at RBC to choose his investments for him.
Triage Investing Blog - A Source for Value & Dividend Investing and Business Fundamentals
Hogwild
Contributor
Contributor
Posts: 393
Joined: 18 Aug 2015 21:46

Re: Decent RBC funds portfolio or combination

Post by Hogwild »

Hi Brad:

Thanks, but believe me, this person will not transfer the funds. It will never happen. Also, there is no one to help him manage the funds except me, and I don't have the time to put into it. Whatever it's going to be, for now, it's going to have to involve RBC funds.
User avatar
big easy
Veteran Contributor
Veteran Contributor
Posts: 1737
Joined: 27 Jul 2006 11:57
Location: Vancouver BC

Re: Decent RBC funds portfolio or combination

Post by big easy »

"Everybody has a plan until they get punched in the face." Mike Tyson
User avatar
AltaRed
Veteran Contributor
Veteran Contributor
Posts: 33398
Joined: 05 Mar 2005 20:04
Location: Ogopogo Land

Re: Decent RBC funds portfolio or combination

Post by AltaRed »

I agree with Big Easy. I would probably pick the Canadian Index Fund for equity, and a GIC ladder for the Fixed Income. I doubt the Canadian Government Bond Index fund can provide much of a return with an MER of 0.67%. See http://fundinfo.rbcgam.com/mutual-funds ... /rbf563.fs for annual and trailing returns and quartile ranking. It is not exactly stellar.

Added: I might also do a comparitive analysis between the Candian Index Fund and the actively managed RBC Canadian Dividend Fund over a multi-year basis to decide whether the added MER has provided material ehancement in value (doubt it though).
Imagefiniki, the Canadian financial wiki The go-to place to bolster your financial freedom
pmj
Veteran Contributor
Veteran Contributor
Posts: 3412
Joined: 27 Feb 2005 18:15
Location: Ottawa

Re: Decent RBC funds portfolio or combination

Post by pmj »

I might also do a comparitive analysis between the Candian Index Fund and the actively managed RBC Canadian Dividend Fund over a multi-year basis to decide whether the added MER has provided material ehancement in value (doubt it though).

I use TDB972, it does show out-performance relative to TSX and, for example, TDB900. Easily checked at Google Finance. The index at Google doesn't include divs (it's not the Total Return Index) - so divs have to be added, whereas they're effectively included within the TDB972 numbers, so probably need to discount by about 2%.
This is useful - Google also has the RBC D-series dividend fund RBF1014. V close to TDB972. Both better than index & XIU.
Peter

Patrick Hutber: Improvement means deterioration
User avatar
AltaRed
Veteran Contributor
Veteran Contributor
Posts: 33398
Joined: 05 Mar 2005 20:04
Location: Ogopogo Land

Re: Decent RBC funds portfolio or combination

Post by AltaRed »

pmj wrote:I use TDB972, it does show out-performance relative to TSX and, for example, TDB900. Easily checked at Google Finance. The index at Google doesn't include divs (it's not the Total Return Index) - so divs have to be added, whereas they're effectively included within the TDB972 numbers, so probably need to discount by about 2%.
This is useful - Google also has the RBC D-series dividend fund RBF1014. V close to TDB972. Both better than index & XIU.
The bank, i.e. RBC Asset Management, where the RDSP is and won't be moved from RBC per the OP, isn't going to allow TD funds or even RBC D series funds. RBC D series funds are only available at RBC DI.
Imagefiniki, the Canadian financial wiki The go-to place to bolster your financial freedom
Hogwild
Contributor
Contributor
Posts: 393
Joined: 18 Aug 2015 21:46

Re: Decent RBC funds portfolio or combination

Post by Hogwild »

Interesting and helpful info. I'm with TD myself. No arguments, it's a better pick as they allow almost anything standard in their RDSPs.

No, I don't think he pays a management fee of 2% for the whole portfolio, like with a full service broker. He pays the individual MERs for each separate fund or portfolio of funds.

Here's the mix he was in seems before-it seems pretty poor, at first glance:

40% in RBC select Very Conservative Portfolio
15% in RBC Canadian Dividend Fund
15% in PH&N Monthly Income Fund-C
10% RBC Balanced Fund
Remainder in GIC and cash

The Very Conservative Portfolio and the Balanced Fund seem to have a fair bit of overlap. Both sit in the somewhat balanced category. Moreover, the Balanced Fund largely is composed of other RBC funds. The PH&N Monthly Income A (previously called C) is also a sort of balancing act. About 50% equities and 50% FI.

Uh oh. Speaking of overlap...RBC Canadian Dividend Series A also owns investments from similar institutions, except mostly (92.45%) equity. PH&N Monthly Income Fund-C top investments include similar companies to the other funds.

RBC GIC rates are pitiful. Seriously.

I will take a look at past performance and then consider the picks you folks kindly mentioned above.
pmj
Veteran Contributor
Veteran Contributor
Posts: 3412
Joined: 27 Feb 2005 18:15
Location: Ottawa

Re: Decent RBC funds portfolio or combination

Post by pmj »

Not suggesting TD funds at RBC!
You challenged whether managed div funds match or out-perform the index / index funds. It doesn't take a lot of research to check that.
I know that TD does, cos I use TD. I've previously checked CIBC and BMO, and they do too. I hadn't checked RBC - although I'd be surprised if it too didn't. RBF266, available at the bank, has essentially identical performance to RBF1014. That also didn't take long, once I found its ID.
It seems to be received wisdom here, that actively managed funds can't out-perform the index. Maybe that's true for the big bad MF cos. But it's not universally true, and it's not true WRT the bank dividend funds.
Peter

Patrick Hutber: Improvement means deterioration
User avatar
AltaRed
Veteran Contributor
Veteran Contributor
Posts: 33398
Joined: 05 Mar 2005 20:04
Location: Ogopogo Land

Re: Decent RBC funds portfolio or combination

Post by AltaRed »

Had we known the holdings currently, we could have focused more quickly. IMO, too many holdings for a $20k account and as you say, too much overlap. If your friend will not be touching the money for 10 years, perhaps something slightly over 50/50 in equity/fixed income might be more appropriate. Either way, no more than 2 funds.

The PH&N income fund could be a one fund solution but with a 1.92% MER seems awfully high for something with >40% fixed income. Shows up with 4th quartile performance (and Morningstar 2 star) the last few years per http://funds.rbcgam.com/pdf/fund-pages/ ... 7660_e.pdf

RBC Balanced Fund, also possibly a one fund solution, looks slightly better performance (probably due to <40% fixed income) but higher MER. Not overly impressed either. Would have to compare them more closely.

The RBC Canadian Government Bond Index Fund mentioned above with a 0.67% MER would be better in my opinion for FI component and one of the RBC Canadian Equity Index Fund or Canadian Dividend Fund may be the best choices for equity.

Note: My bro and I had a good quantity of the RBC Canadian Dividend Fund and RBC Balanced Fund in our elderly mother's portfolio for a number of years BUT they were all D series (lower MERs) in a RBC Direct Investing account.
Imagefiniki, the Canadian financial wiki The go-to place to bolster your financial freedom
Hogwild
Contributor
Contributor
Posts: 393
Joined: 18 Aug 2015 21:46

Re: Decent RBC funds portfolio or combination

Post by Hogwild »

Thanks folks. You have been way beyond helpful, as usual. My friend is in a bad situation, and I hope at least this will secure a bit of his financial future.
OhGreatGuru
Veteran Contributor
Veteran Contributor
Posts: 1361
Joined: 27 Mar 2010 16:01

Re: Decent RBC funds portfolio or combination

Post by OhGreatGuru »

Hogwild wrote:Hi everyone:

I have a friend who has about 20K in an RBC RDSP. ..

Is there a decent performing/lower MER combination of funds, or RBC fund portfolio that is similar in structure to a couch potato type of portfolio? My friend would be sitting on his money for probably 10 years before ever touching it.
If you really want to go couch potato, RBC has CDN Bond Index; CDN Equity Index; US Equity Index; and International Index mutual funds. Their MER's are higher then you can get elsewhere, but still lower than any of their managed funds.

The present mix of funds is too many for a portfolio of only 20K. With much overlap in underlying equity. The "Select Portolio" funds are not the bargain they were when first introduced; their MER's have gone up as they have restructured their fee schedule and added more of RBC's more mediocre funds to the mix. The select Very Conservative fund is 80% fixed income or cash, so why not just put it in the CDN bond index, for example?

If your friend is looking at a 10-yr. investment horizon, he probably just needs a single well-diversified balanced fund. If you wanted a 50/50 split, I would have suggested the RBC Monthly Income Fund, which continues to be well-rated for its class (CDN Neutral Balanced) and has an MER of only 1.20. But, this fund is no longer offered in registered plans. However, you can emulate its performance pretty closely with a 50/50 mix of the CDN Government Bond Index and Canadian Dividend Funds. The latter 2-fund solution also allows you to easily vary the ratio of fixed income to equity to suit.

The PH&N Monthly Income - Series D is a good CDN neutral balanced fund, and it's MER is only 1.09. But the series A version available to RBC retail MF investors has an MER of 1.95, which makes it a bad bargain.
Last edited by OhGreatGuru on 31 Dec 2016 19:46, edited 1 time in total.
Yasehtor
Contributor
Contributor
Posts: 171
Joined: 07 Nov 2014 20:20

Re: Decent RBC funds portfolio or combination

Post by Yasehtor »

Get the portfolio to $25,000 then set up an account PHN which is a RBC company. Get access to the full range of RBC funds as well as PHN funds. They will be D class funds so MER is considerably cheaper.. Keeps him with RBC and keeps more of his money.
OhGreatGuru
Veteran Contributor
Veteran Contributor
Posts: 1361
Joined: 27 Mar 2010 16:01

Re: Decent RBC funds portfolio or combination

Post by OhGreatGuru »

Yasehtor wrote:Get the portfolio to $25,000 then set up an account PHN which is a RBC company. Get access to the full range of RBC funds as well as PHN funds. They will be D class funds so MER is considerably cheaper.. Keeps him with RBC and keeps more of his money.

That would be another solution. Though OP says friend doesn't want to leave RBC for various reasons (although PH&N is now a subsidiary of RBC.) You have to be careful though - PH&N does not offer all RBC funds in class D. In an apparent corporate non-compete decision, they do not offer RBC Class D funds if PH&N already has a similar fund of its own. So they have only Class A RBC Monthly Income, for example, because PH&N has its own similar Monthly Income fund. RBC makes you sign up with RBC Direct Investing to get the Class D - go figure.

But the PH&N Monthly Income will likely be just as good as RBC's, though it has a shorter history.
Yasehtor
Contributor
Contributor
Posts: 171
Joined: 07 Nov 2014 20:20

Re: Decent RBC funds portfolio or combination

Post by Yasehtor »

OhGreatGuru... totally agree with you.. If he wants to stay with RBC Bank directly... so be it just have to pay the higher MERs for A Class funds. I do use PHN and there are a few A Class RBC funds offered, but the vast majority are D Class with probably at least a hundred or so RBC Class D funds.

The only other option that makes sense to me is to use RBC Direct Investing and buy the D class funds there. He could link this account with his online bank account so he would see everything in one place. If he wants to talk to bank representative and deal with bank directly just going to cost a bit more.. It's his money... HAPPY NEW YEAR ALL!
Post Reply