RBC iShares launches Canadian Discount Bond ETF

Jun 13th, 2019 | By | Category: Fixed Income

RBC iShares, the brand name for the strategic alliance between RBC Global Asset Management (RBC GAM) and BlackRock Canada, has launched a new actively managed fixed income ETF on NEO Exchange.

Mark Neill, Head of RBC ETFs.

Mark Neill, Head of RBC ETFs.

The RBC Canadian Discount Bond ETF (RCDB CN), which is managed by RBC GAM, provides exposure to a portfolio of primarily short-term Canadian government and corporate bonds.

According to the fund’s prospectus, the portfolio managers will seek out bonds that are trading below the weighted average price of the Canadian short-term bond universe with an emphasis on bonds which are trading below par.

Security selection follows a rules-based investment approach that considers the term to maturity, credit quality, yield to maturity, and duration, while also considering issuer diversification within the portfolio.

The fund may also invest up to 20% of portfolio assets in short-term bonds issued in the Canadian or US market by the US government, or US and foreign corporations. Some of the fixed income securities in the portfolio may be denominated in US dollars.

According to RBC GAM, the ETF can serve as a complement to an investor’s core bond portfolio and is designed to shorten duration, improve capital preservation, and enhance tax efficiency of investors’ fixed income portfolios.

“With this product launch, RBC iShares continues to deliver high quality and innovative solutions to Canadian investors and advisors,” said Mark Neill, Head of RBC ETFs. “With the launch of the new RBC Canadian Discount Bond ETF, investors will be able to access a low cost, tax efficient solution which leverages the experience and investment expertise of the award-winning Fixed Income team at RBC Global Asset Management.”

The ETF comes with a management fee of 0.15%. Distributions are made to investors on a monthly basis.

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