Today we take aim at the largest Mutual Fund on the Canadian market, the RBC Select Balanced Fund with over $37 billion (yikes!) invested in this fund! (please let me know if I've missed one that's bigger!)
The inception of RBC's fund was 1986 so it's been around for a while but let's see how it compares to an equivalent ETF.
The iShares Core Balanced ETF (ticker: XBAL) is extremely similar to the RBC fund when it comes to their asset allocation. Both are composed of about 38% Fixed Income and the rest invested across Canadian, US and International Stocks. The performance of both funds has understandably been similar as well with >80% correlation between their monthly returns. However, iShares ETF has been outperforming in a noticeable way as of recent.
As of October 31, 2019, the RBC fund returned 10.3% on the 1 Yr period while the iShares ETF has returned 11.06% on the same 1 Yr. Lucky for RBC the long term performance of their fund is strong but with the difference in MER it will be difficult for RBC to keep that going.
The MER of the Series A for the RBC fund is 1.94% vs an MER of only 0.20% for the iShares ETF! The MER of the iShares ETF has also come down from 0.76% about a year ago! There is no doubt that the reduction to the MER is helping the ETF outperform the mutual fund this year. I expect to see that out-performance continue in the future and the AUM of the ETF to continue growing!
Look out RBC!