RBC iShares has launched a new actively managed ETF in Canada providing exposure to high-quality USD fixed income securities that are trading at a discount to par.

Mark Neill, Head of RBC ETFs, RBC Global Asset Management

The RBC US Discount Bond ETF has been listed on Toronto Stock Exchange in Canadian dollars (RUDB CN) and US dollars (RUDB.U CN) and is also available with CAD hedging (RDBH CN).

Managed by RBC Global Asset Management (RBC GAM), the fund provides exposure to a portfolio of primarily short-term US government and corporate bonds.

According to the fund’s prospectus, the portfolio managers seek out bonds that are trading below the weighted average price of the US short-term bond universe with an emphasis on bonds that 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 ETF comes with a management fee of 0.25%. Distributions are made to investors on a monthly basis.

The fund complements the C$870 million RBC Canadian Discount Bond ETF (RCDB CN), listed on NEO Exchange with a management fee of 0.15%, which delivers the same strategy focused on high-quality Canadian government and corporate bonds.

The two ETFs can serve as complements to investors’ core bond portfolios and are designed to shorten duration, improve capital preservation, and enhance the tax efficiency of investors’ fixed income portfolios.

Mark Neill, Head of RBC ETFs at RBC Global Asset Management, said: “Since its launch in 2019, the RBC Canadian Discount Bond ETF has been one of our more popular ETF solutions, attracting significant attention from Canadian advisors and investors due to its unique investment objective and goal of providing attractive after-tax yield to maturity.

“By leveraging the expertise of the US fixed income team at RBC Global Asset Management, we are pleased to expand our discount bond offering to cover the US market, allowing our clients to achieve greater geographic diversification within their fixed income portfolios.”