One of RBC Global Asset Management's [profile]boutiques is preparing for big shifts in the U.S. fixed income mutual fund marketplace. Mark Dowding — partner and co-head of investment grade at London-based, $50-billion fixed income shop BlueBay Asset Management — sees an opportunity for the next big U.S. fixed income player to come from across the pond. And he's launching a new mutual fund to take advantage of that opportunity.

"The time is right for a manager in Europe to emerge," Dowding said when visiting MFWire's New York City offices, noting that the 90s and 2000s saw the rise of BlackRock, Pimco and Wamco. "U.S. investors are effectively overexposed to a small group of U.S. managers who may be vulnerable to group think."

If you're very big it's difficult to run a very active or very nimble strategy. It suits them to say there should be no change in the status quo. They're not taking a lot of risk but being paid handsome fees.

Anything you've done in fixed income for the past 20 years has made you money … It's like driving along the freeway staring at the rearview mirror …

Dowding anticipates a change in investors' allocations among fixed income options.

"We work in an industry where there are many sheep following other sheep," Dowding added. "The predominance of core and core-plus has got to change. It's going to be a fact of history."

To cater to those shifting needs, RBC just launched the RBC BlueBay Absolute Return Fund, sub-advised by BlueBay and offered in I shares only, for institutions and high net worth investors. This is BlueBay's fifth U.S. mutual fund, the first of which debuted in February. RBC bought BlueBay two years ago.

"This is our first absolute return product within that platform," Dowding said. "There's a real ability to make money in fixed income at the moment … I've never known a time when it was as easy to make money as it currently is."

Dowding said that, in contrast to absolute return fixed income offerings heavy on emerging market debt and credit spreads and earnings carry, BlueBay's new mutual fund "is more of a market-neutral product."

"We've got the right product with the right team at the right moment," Dowding said, adding that his team is targeting six percent returns with three percent volatility for the new mutual fund. "Within my team we're running both long-only products and hedge funds."

Dowding, Geraud Charpin and Raphael Robelin PM the new mutual fund.

BlueBay is also expanding. The British fixed income boutique boasts about 330 people, including 80 investment professionals. Thanks to growth in its U.S. business and in BlueBay's global strategies that invest across the entire globe, the Stamford, Connecticut office now has eight investment professionals on the high yield corporate bonds team and four on the investment grade team.

Company Press Release

RBC Global Asset Management (U.S.) Launches new Absolute Return fixed income offering for U.S. investors

MINNEAPOLIS, December 4, 2012 — RBC Global Asset Management (U.S.) Inc. announces the launch of RBC BlueBay Absolute Return Fund, a specialty fixed income mutual fund sub-advised by BlueBay Asset Management, a specialist fixed income and alternative asset manager. The fund is available to institutional and high-net-worth investors across the United States.

“The global financial crisis and current low yielding environment have induced investors to re-think traditional approaches to fixed income portfolios,” said Mark Dowding, co-head of Investment Grade Fixed Income at BlueBay Asset Management and a Senior Portfolio Manager of the RBC BlueBay Absolute Return Fund. “We recognized this need and are pleased to offer investors the additional choice of globally diversified fixed income exposure through a fund focused on generating alpha and maximizing risk-adjusted returns.”

The RBC BlueBay Absolute Return Fund has a flexible duration and is designed to take advantage of rising or falling government yield and credit spread environments. The fund invests across global interest rates, sovereign and non-sovereign credit as well as across currencies, utilizing cash and derivative securities. This makes it unique in the U.S. market. The fund is an investment option for qualified investors seeking diversification to a traditional long-only core fixed income portfolio.

New RBC BlueBay Fund: RBC BlueBay Absolute Return Fund
Ticker: RBARX
Portfolio Managers: Geraud Charpin, Mark Dowding, Raphael Robelin

Class I shares of RBC BlueBay Absolute Return Fund are offered solely to individuals and institutions with a minimum $1 million initial investment. The fund is also expected to be available through various financial intermediaries.

The absolute return investment strategy is also offered as an institutional separate account with a minimum investment of $250 million.

For further information about the RBC BlueBay Absolute Return Fund, please visit https://us.rbcgam.com/mutual-funds/emerging-markets-global-fixed-income-funds/fg-9/default.fs

ABOUT RBC GLOBAL ASSET MANAGEMENT AND ROYAL BANK OF CANADA ?

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, Phillips, Hager & North Investment Management and RBC Global Asset Management (U.S.). RBC GAM is a provider of global investment management services and solutions to individual, high-net-worth and institutional investors through exchange-traded funds, hedge funds, mutual funds, pooled funds, separate accounts and specialty investment strategies. RBC GAM group of companies manage more than $270 billion in assets and have approximately 1,000 employees located across Canada, the United States, Europe and Asia.

Royal Bank of Canada (RY on TSX and NYSE) and its subsidiaries operate under the master brand name RBC. We are Canada’s largest bank as measured by assets and market capitalization, and among the largest banks in the world, based on market capitalization. We are one of North America’s leading diversified financial services companies, and provide personal and commercial banking, wealth management services, insurance, investor services and wholesale banking on a global basis. We employ approximately 80,000 full- and part-time employees who serve more than 15 million personal, business, public sector and institutional clients through offices in Canada, the U.S. and 49 other countries. For more information, please visit rbc.com.

For more information, please contact:?

Yen To, RBC GAM Communications, 416-955-5916, yen.to@rbc.com

RBC Global Asset Management (U.S.) Inc. serves as investment adviser for RBC Funds. The Fund is sub-advised by BlueBay Asset Management LLP, a wholly-owned subsidiary of RBC.

The RBC Funds are distributed by Quasar Distributors, LLC, an affiliate of U.S. Bancorp Fund Services, LLC.

 

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