Fund manager RBC Asset Management Inc sees an untapped opportunity in selling mutual funds directly to investors as its new West Coast affiliate has done for years, President Brenda Vince said in an interview.
Royal Bank of Canada, the parent of RBC Asset Management, bought independent money manager Phillips, Hager & North Investment Management Ltd this spring for about C$1.4 billion in stock, making the bank the biggest retail fund manager in Canada. PH&N is primarily an institutional money manager, but its C$68 billion in assets under management includes C$13 billion in retail mutual funds and accounts of high-net-worth clients.
In the competitive mutual fund industry, PH&N's "direct-to-investor" sales model is under-utilised in Canada, said Vince, who is now responsible for retail funds at both companies. "That's a business that is not well developed in Canada; it is obviously quite well developed in the United States," Vince told Reuters in a recent interview.
"When people think of the big players in the US, most of them are direct-to-investor models: Vanguard, T. Rowe Price or Fidelity," she added. "We believe there's huge opportunity in direct-to-investor in this country. It's a unique investing experience and it's different than what we would deliver in a bank branch."
Traditionally, most PH&N mutual funds have been sold directly through the firm, although a year ago it introduced a new series of funds available through financial advisers. As for direct sales of RBC mutual funds - currently sold by various RBC and third-party advisers - Vince said "we're working on it." RBC Asset Management sells low-cost versions of its funds, known as Series D, directly to online brokerage clients, she noted.
There are no immediate plans to merge any of the 34 PH&N funds with RBC's 98 mutual and pooled funds, Vince said, as the current focus is on finding opportunities for the fund products in the two different networks. Competition is becoming tougher in the industry, but she said RBC Asset Management has an edge over smaller players due to its ability to invest in new technology, its well-known brand, and the parent bank's 1,153 domestic branches.
"The client relationships and the sales that we deliver out of our branch network is still the biggest piece of our business," Vince said. With PH&N, RBC also became a "substantial player" in the Canadian high-net-worth or discretionary advice business, she said. There is about C$15 billion in combined assets at PH&N and RBC's Private Counsel unit. "The one area where we are working to bring the two businesses together quite aggressively is our high-net-worth discretionary business," Vince said.
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