18 slides from RBC Enhanced North American Value Fund's investor presentation, May 14, 2013
Slide 1: Convertible Bonds – The Best of Both Worlds
RBC GAM Webcast Convertible Bonds – The Best of Both Worlds May 14th, 2013 Mike Reed, Senior Portfolio Manager For Advisor Use Only
Slide 2: Convertible Bonds – The Asset Class
Convertible Bonds – The Asset Class Equity-like upside, bond-like protection • Convertibles are a hybrid security that combine the security of bond investment with the upside potential of equities DEBT CONVERTIBLES EQUITY • Unlimited equity upside • Fixed current income • Repayment of principal For
Slide 3: Convertible Bond Payoff
Convertible Bonds – The Asset Class Convertible Bond Payoff • Convertibles can be seen as an optimal alternative to direct equity exposure Bond Like Equity Sensitive Convertible Bond Payoff • Balanced: The convertible is at its point of 160 Bond Balanced Equity maximum convexity. As the underlying e
Slide 4: Index Characteristics
Convertible Bonds – Index Characteristics UBS Global Focus Convertible Index Comparative Performance Comparative Index Performance (Rebased to 100) Statistical Metrics, as at 31 March 2013 300 UBS Global MSCI World Equity Index MSCEI Convert Bond Corp Bond UBS Global Focus Convertible Bond Index Mer
Slide 5: Investment Case vs Equities
Convertible Bonds – Investment Case vs Equities Convertibles have offered similar returns with lower volatility Convertibles have demonstrated an improved risk/reward profile Total return Volatility Sharpe Equities Converts Equities Converts Equities Converts 1 year 8.20% 4.84% 12.8% 5.6% 0.63 0.85
Slide 6: Current Outlook & Investment Case: Convertible inclusion improves risk/return
Convertible Bonds – Current Outlook & Investment Case Convertible inclusion improves a portfolio‘s risk/return • The inclusion of convertibles clearly expands the efficient frontier in a portfolio • Replacing stock allocations with convertibles reduces volatility • Adding convertibles improves the d
Slide 7: Investing in Convertibles at BlueBay
Investing in Convertibles at BlueBay Macro Overlay • BlueBay employs a unique 360 degree • Portfolio construction is performed by approach to convertible fund combining top down, bottom up and management derivative valuation techniques Portfolio Portfolio Construction Construction Fundamental Conver
Slide 8: BlueBay Convertible Bonds – The Team
BlueBay Convertible Bonds – The Team A dedicated team of investment professionals Michael Reed Senior Portfolio Manager • Mike joined BlueBay in October 2007 from Pendragon, where, as Risk Management, a Partner, he ran the company’s convertible arbitrage strategies. Compliance & Legal Prior to that,
Slide 9: Convertible Bond Market Overview
Convertible Bond Market Overview Advantages of access to global convertible bond market Canadian Market Global Market Market Statistics Market Statistics Market Capitalization CAD$20.5bn Market Capitalization US$475bn Average issue Size* CAD$77m Average issue Size* US$888m Sector Breakdown Sector Br
Slide 10: Current Outlook & Investment Case: Credit markets remain attractive
Convertible Bonds – Current Outlook & Investment Case Credit markets remain attractive Credit spreads – Implying high rates of defaults, to 31 March 2013 Default rates – Expected to stay low 2013 1,000 220 16% Crossover Long-term average Investment Grade 14% High Yield default rate 900 200 4.3% 180
Slide 11: Equities supported by valuation arguments
Convertible Bonds – Current Outlook & Investment Case Equities supported by valuation arguments Dividend yield gap - Equity yields compelling S&P dividend payouts - Low by historic ratios. As at 31 March 2013 12% 120 90% Dividends (points) Earnings (points) 80% 10% 100 Payout (ratio) (10-yr US Gov't
Slide 12: Emerging Markets – Credit and Equity Opportunities
Convertible Bonds – Current Outlook & Investment Case Emerging Markets – Credit and Equity Opportunities • Strong GDP growth and healthy banking systems are supporting EM credit • Equivalent grade credits trade at a discount in EM • Healthy asset inflows are supportive of both EM credit and equity m
Slide 13: Convertibles perform well in rising rate environments
Convertibles perform well in rising rate environments 30 Equities CBs USTs 25 20 15 (%) 10 5 0 -5 -10 1994 1999 2009 • We believe that in periods of rising rates the equity component of convertibles normally compensates for falling bond floors • Over last 20 years, in each annual period that governm
Slide 14: APPENDIX
APPENDIX For Advisor Use Only
Slide 15: BlueBay Global Convertible Bond Fund Track Record
APPENDIX: BlueBay Convertible Bonds – Our Track Record Long Only Products – BlueBay Global Convertible Bond Fund Fund Type: UCITS IV Fund (Part I SICAV) This Fund is not available to Canadian investors. Performance (US$ gross of fees to 30 April 2013) 1M 3M YTD 2012 2011 2010 2009 Ann. SI* BlueBay F
Slide 16: Performance characteristics vs UBS Global Convertible Index
APPENDIX: Convertible Bonds at BlueBay – Our Track Record Performance characteristics vs UBS Global Convertible Index Fund Type: UCITS IV Fund (Part I SICAV) This Fund is not available to Canadian investors. Comparison with the UBS Global Convertible Index (US$ net) over 3 years to December 2012 8.0
Slide 17: About BlueBay: Key facts
APPENDIX: About BlueBay Key facts • Founded in 2001, BlueBay is a leading European credit specialist with long-only and alternative capabilities with assets under management of over US$55.7 billion* • Absolute return-style products across investment grade, high yield debt, loans, distressed debt, co
Slide 18: Disclaimer
Disclaimer The full name of the Canadian-domiciled fund is BlueBay Global Convertible Bond Fund (Canada) (“Fund”). RBC Global Asset Management Inc. (“GAM”), an indirect wholly-owned subsidiary of Royal Bank of Canada, is the manager of the Fund. BlueBay Asset Management LLP, a wholly-owned subsidiar