RBC cutting expenses on four mutual funds to draw advisers, investors

RBC Global Asset Management, in an effort to gain a better foothold in the U.S. mutual fund market, is kicking off discounted teaser rates on four of its 23 mutual funds starting Monday. Described as an “institutional seed pricing and service model,” RBC is cutting the expense ratios on the four funds by between 39% and 44% for new and existing shareholders through October 2017. Matthew Appelstein, head of U.S. sales and distribution for RBC Global Asset Management, said it can be just as important to grow assets in a fund as to develop a strong investing track record, though he hopes his funds can do both. But without a significant number of assets, many broker-dealers and financial advisers simply won't make an allocation. “It's part of a long-term strategy to grow our business,” said Mr. Appelstein. “We have limited brand in the U.S., we have limited distribution in the U.S., but we have a successful institutional business. We've got to think differently about the retail market.” Starting Nov. 1, 2017, RBC plans to start increasing the expense ratios of the four funds incrementally over an 18-month period, back to or just below current levels. The marketing program, which is targeting financial advisers, also is offering services like those available to separate account holders to intermediaries whose clients invest $10 million or more in one of the participating funds. “RBC is seeking to stand out in a crowded asset management field where investors and advisers are increasingly seeking low-cost passive mutual funds and ETFs,” said Todd Rosenbluth, director of mutual fund and ETF research at S&P Capital IQ. “This move helps to bring the retail share classes to have more competitive expense ratios.” The funds being temporarily discounted include: • The RBC Emerging Markets Equity Fund (REEIX) will have its expense ratio cut to 72.5 basis points from 120. • The RBC Mid Cap Value Fund (RBMVX) will have its expense ratio cut to 55 basis points from 90. • The RBC BlueBay Emerging Market Corporate Bond Fund (RBECX) will have its expense ratio cut to 57.5 basis points from 100. • The RBC BlueBay Global High Yield Bond Fund (RGHYX) will have its expense ratio cut to 45 basis points from 80.