By Rudy Luukko | 15/05/18

RBC Global Asset Management Inc. has launched a passive strategy of investing in the largest U.S. banks, available as either non-hedged or currency-hedged exchange-traded funds.

About the Author
Rudy Luukko is a freelance writer who contributes to Morningstar.ca on topics involving fund industry trends and regulatory issues. He retired in May 2018 from his position as editor, investment and personal finance, at Morningstar Canada, where he had worked since 2004. He has also worked as an editor and writer for various general, specialty and institutional media, and he has co-authored courses for the Canadian Securities Institute. Follow Rudy on Twitter: @RudyLuukko.

RBC U.S. Banks Yield Index (symbol: RUBY) and its U.S.-dollar-denominated class of shares (RUBY.u), along with RBC U.S. Banks Yield (CAD Hedged) Index (RUBH), opened for trading today on the Toronto Stock Exchange. The management fee for both new ETFs is 0.29%, which includes most expenses.

The benchmark index for the ETFs is the Solactive U.S. Banks Yield Index and its currency-hedged counterpart. The index constituents are 21 of the largest U.S. dividend-paying bank stocks, as measured by market capitalization. They are weighted in the index on the basis of their annual dividend yields.

According to the prospectus, the seven highest dividend-yielding U.S. bank stocks each receive a 7.14% weight, and the next seven highest-yielding stocks receive a 4.76% weight. The seven index constituents with the lowest yields each receive a 2.38% weight.

In RBC's ongoing discussions with investors and advisors, there has been "notable interest in further exposure to the U.S banking sector," Mark Neill, head of RBC ETFs, said in a release. "This is driven by a desire for more diversification in the financial sector and by recent trends in the U.S., such as strong growth signals and changing monetary policy that has created a positive long-term outlook for U.S. banks."

Don’t miss out on communications from Morningstar Canada! Sign up for our specialised newsletters, get early notice of our events, and get access to exclusive promotional content. Manage your subscriptions here.
Video Reports
More...
Click here to view all