RBC GAM and BlackRock Canada form strategic ETF alliance

Jan 10th, 2019 | By | Category: ETF and Index News

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RBC Global Asset Management (RBC GAM) and BlackRock Canada have formed a strategic alliance in a bid to deliver the most comprehensive ETF offering in the Canadian marketplace.

iShares RBC GAM Canada

To celebrate the alliance, members of BlackRock Canada and RBC GAM participated in a market opening ceremony at the Toronto Stock Exchange on 9 January 2019.

Under the alliance, the ETF families offered by BlackRock Canada, the Canadian division of the world’s largest ETF manager, and RBC GAM, Canada’s largest asset manager, have been brought together under one new brand – RBC iShares.

Combined, the 150-strong ETF suite houses over $60 billion in assets under management and consists of index, factor, quantitative, and active strategies. BlackRock Canada contributed 106 funds – generally low-cost plain vanilla index offerings – while RBC GAM provided the remaining 44 ETFs which consist of primarily smart beta and actively managed solutions.

“This alliance is a win for Canadian investors and reflects our unwavering focus on the interests of clients,” said Damon Williams, CEO of RBC Global Asset Management. “Canadian investors deserve a level of choice, quality, and cost competitiveness that is second to none – and that is what RBC iShares delivers.”

Martin Small, BlackRock’s Head of iShares for Canada & the US, added, “Around the world, iShares is known for the breadth of its ETF offerings, technology operating expertise, and investor education, while RBC Global Asset Management is the leader in Canadian mutual funds and has built a leading franchise developing innovative solutions. Our aspiration is to champion a new standard for the Canadian ETF market by providing the best solutions and service and help grow the industry through innovative tools and technology for existing and new managers.”

There has been no change to the names or ticker symbols of RBC ETFs or BlackRock Canada’s iShares ETFs as a result of the alliance.

Unified distribution model

RBC GAM and BlackRock Canada will offer unified distribution support and services for RBC iShares and will work together to jointly develop new strategies to further expand the solution set.

The two firms remain separate legal entities. They will continue to maintain separate fund management and portfolio advisory responsibilities for their specific core capabilities.

Specialized services will also be provided to third-party discretionary portfolio managers, advisors, and institutions, including capital markets support, portfolio construction resources, and dedicated ETF strategists.

Enhancing & refining the RBC iShares ETF suite

Leveraging the opportunities offered by the strategic alliance, RBC GAM has announced that a number of its index ETFs will undergo changes designed to capture economies of scale and simplify the RBC iShares ETF line-up.

The changes, due to be implemented on 5 April 2019 subject to regulatory and unitholder approval, are outlined below.

The following RBC ETFs will be absorbed into their corresponding iShares ETF:

The RBC Canadian Short Term Bond Index ETF will merge with the iShares Core Canadian Short Term Bond Index ETF (XSB CN); MER – 0.09%.
The RBC Canadian Bond Index ETF will merge with the iShares Core Canadian Universe Bond Index ETF (XBB CN); MER – 0.09%.
The RBC Canadian Equity Index ETF will merge with the iShares Core S&P/TSX Capped Composite Index ETF (XIC CN); MER – 0.05%.
The RBC US Equity Index ETF will merge with the iShares Core S&P 500 Index ETF (XUS CN); MER – 0.09%.
The RBC International Equity Index ETF will merge with the iShares Core MSCI EAFE IMI Index ETF (XEF CN); MER – 0.20%.

BlackRock Canada will become the investment fund manager for the RBC Global Government Bond (CAD Hedged) Index ETF (RGGB CN).

Additionally, the RBC Emerging Markets Equity Index ETF (REEM CN) will be terminated.

“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,” said Doug Coulter, President of RBC Global Asset Management. “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.”

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