Leverages the strategic alliance with
BlackRock Canada
Changes will streamline and simplify the
RBC iShares ETF lineup, with benefits to investors including
greater liquidity and efficiency
TORONTO, Jan. 8, 2019 /CNW/ - RBC Global Asset Management
Inc. ("RBC GAM Inc.") announced today a number of changes to RBC
Index ETFs and RBC Index Funds, including proposed changes to
investment objectives, mergers, and terminations. Some of these
changes will be subject to unitholder and regulatory approval.
This announcement reflects the opportunities available through
the strategic alliance between RBC GAM Inc. and BlackRock Asset
Management Canada Limited ("BlackRock Canada"), announced on
January 8, 2019.
The proposed changes will streamline and simplify the RBC
iShares solution suite, and will result in tangible benefits to
unitholders of the RBC Index ETFs including greater liquidity
associated with the larger iShares ETFs and historically more
favorable spreads on the secondary market, which will ultimately
reduce transactional costs for investors. In cases where RBC ETFs
are merging with iShares ETFs, the management fees for the
continuing iShares ETFs are either the same or lower than those of
the merging RBC ETF.
"We are pleased to leverage the RBC iShares alliance for the
benefit of investors, applying the expertise of the world's largest
ETF and index manager to RBC Global Asset Management's line-up of
index ETFs and index mutual funds," said Doug Coulter, President of RBC GAM Inc. "As the
world's largest asset manager, BlackRock is a global leader in
index management with expert capabilities across portfolio
management, trade execution, and risk management."
Details of the proposed changes are as follows:
RBC Index ETFs
1. ETF mergers
Subject to
unitholder and regulatory approval, effective on or about
April 5, 2019, RBC GAM Inc. is
proposing to merge the following RBC ETFs with iShares ETFs:
Terminating RBC
ETF
|
Mgmt Fee (%)
|
Continuing iShares
ETF
|
Mgmt Fee (%)
|
RBC Canadian Short
Term Bond Index
ETF (RSCB)
|
0.10
|
iShares Core Canadian
Short Term Bond
Index ETF (XSB)
|
0.09
|
RBC Canadian Bond
Index ETF (RCUB)
|
0.10
|
iShares Core Canadian
Universe Bond
Index ETF (XBB)
|
0.09
|
RBC Canadian Equity
Index ETF (RCAN)
|
0.05
|
iShares Core
S&P/TSX Capped Composite
Index ETF (XIC)
|
0.05
|
RBC U.S. Equity Index
ETF (RUSA)
|
0.09
|
iShares Core S&P
500 Index ETF (XUS)
|
0.09
|
RBC International
Equity Index ETF
(RINT)
|
0.20
|
iShares Core MSCI
EAFE IMI Index ETF
(XEF)
|
0.20
|
The Independent Review Committee of the RBC ETFs considered and
provided a positive recommendation for the proposed mergers, after
determining that the changes achieve a fair and reasonable result
for each RBC ETF.
The proposed merger of RBC U.S. Equity Index ETF (RUSA) is
expected to occur on a tax-deferred basis and would therefore not
be considered a disposition for tax purposes. The other four
proposed ETF mergers described above are expected to take place on
a taxable basis, would be considered a disposition for tax
purposes, and may have tax consequences for unitholders of the
terminating RBC ETFs.
Unitholders of each terminating RBC ETF will receive units of
the respective continuing iShares ETF based on the continuing
iShares ETF's NAV per unit. Each of the terminating RBC ETFs will
be wound down following the mergers. Unitholders will have the
right to redeem units of the terminating RBC ETFs up to the close
of business on the business day immediately preceding the effective
date of the mergers.
2. Investment fund manager change:
RBC Global Government Bond (CAD Hedged) Index ETF
(RGGB)
Subject to unitholder and regulatory approval,
effective on or about April 5, 2019,
BlackRock Canada will become the investment fund manager and
portfolio advisor for the RBC Global Government Bond (CAD Hedged)
Index ETF.
The Independent Review Committee of the RBC ETFs considered and
provided a positive recommendation for the proposed change to
investment fund manager, after determining that the changes achieve
a fair and reasonable result for the ETF.
3. ETF termination: RBC Emerging
Markets Equity Index ETF (REEM)
Effective on or about
April 5, 2019, the RBC Emerging
Markets Equity Index ETF will be terminated.
RBC Index Funds
1. Proposed investment objective and
strategy changes
Subject to unitholder approval, effective
on or about April 5, 2019, RBC GAM
Inc. is proposing to change the investment objectives and
strategies of the RBC Index Funds to provide the Funds with the
ability to invest in iShares ETFs.
The RBC Index Funds include:
- RBC Canadian Government Bond Index Fund
- RBC Canadian Bond Index Fund*
- RBC Canadian Index Fund
- RBC U.S. Index Fund
- RBC U.S. Index Currency Neutral Fund
- RBC International Index Currency Neutral Fund
In addition, the benchmarks for the RBC Index Funds will be
aligned to those of the respective iShares ETF that each Fund will
invest in or may invest in at a future date (see benchmark changes
below).
The Independent Review Committee of the RBC Funds considered and
provided a positive recommendation for the proposed investment
objective changes, after determining that the changes achieve a
fair and reasonable result for each of the applicable funds.
* Subject to the necessary approvals, we anticipate
that the management fee of RBC Canadian Bond Index Fund (Series F
units) will be lowered from 0.10% to 0.09%, on or about April 5,
2019, to align with the management fee of the iShares Core Canadian
Universe Bond Index ETF.
|
2. Sub-advisor
changes
Effective on or about April
9, 2019, BlackRock Canada will become the sub-advisor of the
RBC Canadian Index Fund and the RBC U.S. Index Fund, replacing
State Street Global Advisors, Ltd.
3. Benchmark changes
To align
with the benchmarks used within the RBC iShares Strategic Alliance,
the following table summarizes changes to benchmarks for the RBC
Index Funds.
RBC Index Fund
|
Benchmark
change
|
RBC Canadian
Government Bond Index Fund
|
No change (benchmark
is FTSE Canada Federal Bond
Index)
|
RBC Canadian Bond
Index Fund
|
Current: FTSE Canada
Universe + Maple Bond Index
New: FTSE Canada
Universe Bond Index1
|
RBC Canadian Index
Fund
|
Current: FTSE Canada
All Cap Domestic Index
New: S&P/TSX
Composite Index2
|
RBC U.S. Index
Fund
|
Current: FTSE USA
Index (CAD)
New: S&P 500
Index (CAD)2
|
RBC U.S. Index
Currency Neutral Fund
|
Current: FTSE USA
Hedged 100% to CAD Index
New: S&P 500
Hedged 100% to CAD Index1
|
RBC International
Index Currency Neutral Fund
|
Current: FTSE
Developed ex North America Hedged
100% to CAD Index
New: MSCI EAFE IMI
Hedged 100% to CAD Index1
|
1
|
Effective on or about
April 5, 2019
|
2
|
Effective on or about
April 9, 2019
|
Unitholder Approvals
RBC GAM Inc. will seek the
required unitholder approvals for the proposed mergers, change in
investment fund manager and investment objective changes, as
outlined above, at special unitholder meetings to be held on or
about March 22, 2019, in Toronto, Ontario.
A Notice-and-Access document which outlines the procedures for
accessing the management information circular containing full
details of the proposals will be mailed on or about February 15, 2019, to unitholders of record as of
February 6, 2019. If the necessary
approvals are received, the changes are expected to be effective on
or about April 5, 2019.
Commissions, trailing commissions, management fees and expenses
all may be associated with investing in mutual funds and
exchange-traded funds (ETFs). Please read the relevant prospectus
before investing. Mutual Funds and ETFs are not guaranteed, their
values change frequently and past performance may not be repeated.
Tax, investment and all other decisions should be made, as
appropriate, only with guidance from a qualified professional. RBC
iShares ETFs are comprised of RBC ETFs managed by RBC Global Asset
Management Inc. (a member of the RBC GAM group of companies) and
iShares ETFs managed by BlackRock Asset Management Canada
Limited.
About RBC Global Asset Management
RBC Global Asset
Management (RBC GAM) is the asset management division of Royal
Bank of Canada (RBC) and includes
institutional money managers BlueBay Asset Management and Phillips,
Hager & North Investment Management. RBC GAM is a provider of
global investment management services and solutions to
institutional, high-net-worth and individual investors through
separate accounts, pooled funds, mutual funds, hedge funds,
exchange-traded funds and specialty investment strategies. The RBC
GAM group of companies manage approximately $425 billion in assets and have approximately
1,400 employees located across Canada, the United
States, Europe and
Asia.
About BlackRock
BlackRock helps investors build better
financial futures. As a fiduciary to our clients, we provide the
investment and technology solutions they need when planning for
their most important goals. As of September
30, 2018, the firm managed approximately US$6.44 trillion in assets on behalf of investors
worldwide. BlackRock, Inc., together with its worldwide affiliates,
is the world's largest ETF provider by assets under management as
of September 30, 2018 (source:
BlackRock, Inc.). For additional information on BlackRock,
please visit www.blackrock.com.
About iShares
iShares unlocks opportunity across
markets to meet the evolving needs of investors. With more than
twenty years of experience, a global line-up of 800+ exchange
traded funds (ETFs) and US$1.8
trillion in assets under management as of September 30, 2018. iShares continues to drive
progress for the financial industry. iShares funds are powered by
the expert portfolio and risk management of BlackRock, trusted to
manage more money than any other investment firm.
"FTSE®" is a trademark of the London Stock Exchange Group
companies and is used under licence. MSCI and EAFE are trademarks
of MSCI, Inc. S&P® is a registered trademark of Standard &
Poor's Financial Services LLC. TSX is a trademark of TSX Inc. The
funds referenced herein are not sponsored, endorsed, sold or
promoted by FTSE International Limited, FTSE Global Debt Capital
Markets Inc., MSCI, Inc., Standard & Poor's Financial Services
LLC, TSX Inc. or their licensors, and they make no representation,
warranty, or condition regarding the results to be obtained from
the use of any index referenced herein or the advisability of
investing in any of the funds.
SOURCE RBC Global Asset Management Inc.