You are currently viewing the Canadian Institutional website. You can change your location here or visit other RBC GAM websites.

Welcome to the RBC Global Asset Management site for Institutional Investors
Français

In order to proceed to the site, please accept our Terms & Conditions.

Please read the following terms and conditions carefully. By accessing rbcgam.com and any pages thereof (the "site"), you agree to be bound by these terms and conditions as well as any future revisions RBC Global Asset Management Inc. ("RBC GAM Inc.") may make in its discretion. If you do not agree to the terms and conditions below, do not access this website, or any pages thereof. Phillips, Hager & North Investment Management is a division of RBC GAM Inc. PH&N Institutional is the institutional business division of RBC GAM Inc.

No Offer

Products and services of RBC GAM Inc. are only offered in jurisdictions where they may be lawfully offered for sale. The contents of this site do not constitute an offer to sell or a solicitation to buy products or services to any person in a jurisdiction where such offer or solicitation is considered unlawful.

No information included on this site is to be construed as investment advice or as a recommendation or a representation about the suitability or appropriateness of any product or service. The amount of risk associated with any particular investment depends largely on the investor's own circumstances.

No Reliance

The material on this site has been provided by RBC GAM Inc. for information purposes only and may not be reproduced, distributed or published without the written consent of RBC GAM Inc. It is for general information only and is not, nor does it purport to be, a complete description of the investment solutions and strategies offered by RBC GAM Inc., including RBC Funds, RBC Private Pools, PH&N Funds, RBC Corporate Class Funds and RBC ETFs (the "Funds"). If there is an inconsistency between this document and the respective offering documents, the provisions of the respective offering documents shall prevail.

RBC GAM Inc. takes reasonable steps to provide up-to-date, accurate and reliable information, and believes the information to be so when published. Information obtained from third parties is believed to be reliable, but no representation or warranty, express or implied, is made by RBC GAM Inc., its affiliates or any other person as to its accuracy, completeness, reliability or correctness. RBC GAM Inc. assumes no responsibility for any errors or omissions in such information. The views and opinions expressed herein are those of RBC GAM Inc. and are subject to change without notice.

About Our Funds

The Funds are offered by RBC GAM Inc. and distributed through authorized dealers. Commissions, trailing commissions, management fees and expenses all may be associated with the Funds. Please read the offering materials for a particular fund before investing. The performance data provided are historical returns, they are not intended to reflect future values of any of the funds or returns on investment in these funds. Further, the performance data provided assumes reinvestment of distributions only and does not take into account sales, redemption, distribution or optional charges or income taxes payable by any unitholder that would have reduced returns. The unit values of non-money market funds change frequently. For money market funds, there can be no assurances that the fund will be able to maintain its net asset value per unit at a constant amount or that the full amount of your investment in the fund will be returned to you. Mutual fund securities are not guaranteed by the Canada Deposit Insurance Corporation or by any other government deposit insurer. Past performance may not be repeated. ETF units are bought and sold at market price on a stock exchange and brokerage commissions will reduce returns. RBC ETFs do not seek to return any predetermined amount at maturity. Index returns do not represent RBC ETF returns.

About RBC Global Asset Management

RBC Global Asset Management is the asset management division of Royal Bank of Canada ("RBC") which includes the following affiliates around the world, all indirect subsidiaries of RBC: RBC GAM Inc. (including Phillips, Hager & North Investment Management and PH&N Institutional), RBC Global Asset Management (U.S.) Inc., RBC Global Asset Management (UK) Limited, RBC Global Asset Management (Asia) Limited, BlueBay Asset Management LLP, and BlueBay Asset Management USA LLC.

Forward-Looking Statements

This website may contain forward-looking statements about general economic factors which are not guarantees of future performance. Forward-looking statements involve inherent risk and uncertainties, so it is possible that predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution you not to place undue reliance on these statements as a number of important factors could cause actual events or results to differ materially from those expressed or implied in any forward-looking statement. All opinions in forward-looking statements are subject to change without notice and are provided in good faith but without legal responsibility.

Accept Decline
by  RBC Global Equity teamJ.Richardson Oct 11, 2024

Reflecting on the past month, Jeremy Richardson explores:

  1. Democracy: Close polls in the US and what that may mean for equity investors.

  2. Debt: When we come to the US election, there are a lot of promises that are being made.

  3. Deals: Like London busses, nothing happens, then all of a sudden three come along at once.

Watch time: 6 minutes, 13 seconds

View transcript

Hello, this is Jeremy Richardson from the RBC Global Equity team here with another update. Three things to talk about this time. Democracy, debt and deals.

So on the democracy, we've got US elections coming up in November. The polls are very close. They're essentially four potential outcomes. One party gets control of the White House and Congress or the other party gets, both of those, or there's a combination between the two. So essentially four outcomes. And the polling is so close that it's really hard to differentiate between which is the most likely.

Talking to political experts, they tell me that there's a margin of error of around about 3 to 4% in the polls. And until we get one of the candidates leading by more than that, it seems as though it's still too close to call. But for equity investors, that's not necessarily a bad thing, because if you get one of those outcomes where one party has the White House and the other party has Congress, then it makes legislation really, really tricky, and so you're less likely to get significant change. And for equity investors, less change actually helps us forecast the future when thinking about company profits. So it's not necessarily something to be feared of from an equity market point of view.

The other thing I thought was quite interesting was some research that crossed my desk this last week or so, talking about the likely path of equity markets into the election, because whilst we have a very divided election and that means that one side of the political discussion is worried the other side is going to win and the other side is worried that the other side is going to win. That means that, you know, very few people are sort of got the confidence to come in and buy, but after the election, we get clarity, we get certainty, there is a result, and at least half of the market is probably going to be happy with the outcome and they at least will buy.

So the trajectory after the election could very well be sort of, a more positive, trajectory. However, there are some things that we don't quite fully know the answers to yet and which as an investor, I will be looking for more clarity over as we get closer to Election Day, and that is around, two particular aspects which I think will potentially impact corporate profitability.

The first one, taxes, and the second one, tariffs. Now, you know, both parties have different, manifestos on both of these two items. There is a sense that, taxes are more likely to rise under Democrats and that tariffs are more likely to rise under the Republicans. So, you know, you can't have your cake and eat it, it seems one on both of these two things. If one party wins you're going to get something which is less helpful. So again it may be a middle path where you have that division that may offer, some sort of solace, but more clarity around that I think would be appreciated by equity investors.

For the moment at least we're not seeing either of those two things being factored yet into market expectations for individual company, profit forecasts. That's an area of potential risk ahead. So, moving on from democracy, let's talk a little bit about, debt and the reason for mentioning this is because, when we come to the US election, there's a there are a lot of promises that are being made.

It's always the way with elections. You win on the basis of promises, but those promises will ultimately have to be paid for. And the size of the US budget deficit is something that I think at the moment at least in capital markets, is not receiving a huge amount of attention and yet when we look at the path for future interest rates, it seems as though there is quite a, dare I say, bullish point of view, from the market expecting a series of interest rate cuts to get down to lower than 3%, as the terminal rate.

Now, if we think that inflation is going to be sort of is beaten and, you know, we expect some sort of positive real rate of interest to balance the needs of savers and borrowers, that seems quite an aggressive assumption. For the moment at least whilst it holds, though, lower interest rates actually are quite supportive for capital markets generally.

And the final thing I just wanted to mention was deals. A bit like London busses, nothing happens and all of a sudden three come along at once and there are three really interesting deals which I think are worth keeping an eye on. The first of which is the offer for, US Steel by Nippon Steel of Japan.

The second is the, bid by Alimentation Couche-Tard for Seven & I, the Japanese convenience store operator. And the third is, UniCredit. That hasn't actually formally announced a deal yet, but is expected to do so for Commerzbank. All three of these are interesting for different reasons. Essentially they are though, pointing to, they're asking questions of governments.

Do governments, the Japanese government, the US government, the German government, believe in free open markets and free capital? Or will there be pressure to actually intervene in these deals, for more domestic local reasons? And that's a really interesting question, because it does, I think, show, call into sharp relief some of the pressures that governments are feeling, to respond to electorates around having a more active industrial policy.

But when we think about, you know, initiatives like, you know, trying to raise productivity in the EU, the recent Draghi report on that topic, or in Japan, the Japanese government trying to, you know, stimulate higher returns on capital. That would suggest a more open point of view, but those sort of more open decisions don't come without any political cost.

So it will be interesting to see how those deals progress. And whether they are allowed to progress. I hope that's been of interest. And I look forward to catching up with you again soon.

Get the latest insights from RBC Global Asset Management.

Disclosure

This material is provided by RBC Global Asset Management (RBC GAM) for informational purposes only and may not be reproduced, distributed or published without the written consent of RBC GAM or its affiliated entities listed herein. This material does not constitute an offer or a solicitation to buy or to sell any security, product or service in any jurisdiction; nor is it intended to provide investment, financial, legal, accounting, tax, or other advice and such information should not be relied or acted upon for providing such advice. This material is not available for distribution to investors in jurisdictions where such distribution would be prohibited.

RBC GAM is the asset management division of Royal Bank of Canada (RBC) which includes RBC Global Asset Management Inc. (RBC GAM Inc.), RBC Global Asset Management (U.S.) Inc. (RBC GAM-US), RBC Global Asset Management (UK) Limited (RBC GAM-UK), RBC Global Asset Management (Asia) Limited (RBC GAM-Asia) and RBC Indigo Asset Management Inc. (RBC Indigo), which are separate, but affiliated subsidiaries of RBC.

In Canada, this material is provided by RBC GAM Inc. (including PH&N Institutional) and/or RBC Indigo, each of which is regulated by each provincial and territorial securities commission with which it is registered. In the United States, this material is provided by RBC GAM-US, a federally registered investment adviser. In Europe this material is provided by RBC GAM-UK, which is authorised and regulated by the UK Financial Conduct Authority. In Asia, this material is provided by RBC GAM-Asia, which is registered with the Securities and Futures Commission (SFC) in Hong Kong.

Additional information about RBC GAM may be found at www.rbcgam.com.

This material has not been reviewed by, and is not registered with any securities or other regulatory authority, and may, where appropriate and permissible, be distributed by the above-listed entities in their respective jurisdictions.

Any investment and economic outlook information contained in this material has been compiled by RBC GAM from various sources. Information obtained from third parties is believed to be reliable, but no representation or warranty, express or implied, is made by RBC GAM, its affiliates or any other person as to its accuracy, completeness or correctness. RBC GAM and its affiliates assume no responsibility for any errors or omissions in such information.

Opinions contained herein reflect the judgment and thought leadership of RBC GAM and are subject to change at any time. Such opinions are for informational purposes only and are not intended to be investment or financial advice and should not be relied or acted upon for providing such advice. RBC GAM does not undertake any obligation or responsibility to update such opinions.

RBC GAM reserves the right at any time and without notice to change, amend or cease publication of this information.

Past performance is not indicative of future results. With all investments there is a risk of loss of all or a portion of the amount invested. Where return estimates are shown, these are provided for illustrative purposes only and should not be construed as a prediction of returns; actual returns may be higher or lower than those shown and may vary substantially, especially over shorter time periods. It is not possible to invest directly in an index.

Some of the statements contained in this material may be considered forward-looking statements which provide current expectations or forecasts of future results or events. Forward-looking statements are not guarantees of future performance or events and involve risks and uncertainties. Do not place undue reliance on these statements because actual results or events may differ materially from those described in such forward-looking statements as a result of various factors. Before making any investment decisions, we encourage you to consider all relevant factors carefully.

® / TM Trademark(s) of Royal Bank of Canada. Used under licence.

© RBC Global Asset Management Inc., 2024
document.addEventListener("DOMContentLoaded", function() { let wrapper = document.querySelector('div[data-location="inst-insight-article-additional-resources"]'); if (wrapper) { let liElements = wrapper.querySelectorAll('.link-card-item'); liElements.forEach(function(liElement) { liElement.classList.remove('col-xl-3'); liElement.classList.add('col-xl-4'); }); } })