RBC Monthly Income Fund?
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Thread: RBC Monthly Income Fund?

  1. #1
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    RBC Monthly Income Fund?

    I think this has been a "popular' fund over the years. Given it's recent performance (info. as of Aug 31/15): YTD: -1.8% & 1-Year: -2.6%, would this be a good time to put some money into it? Comments?


  2. #2
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    Not answering your question but I have held this fund in an open account for several years now with no complaints up until the last year. I too will be interested in any responses.

  3. #3
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    (I've held it on & off ... just thinking about dipping a toe in again)

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    I used to hold that fund, but I seem to recall that it could no longer be held in registered accounts.

    I own TD Monthly Income (TDB622). The only MF I own. I use it in registered accounts to mop up dribs and drabs of income until such time I have enough to invest elsewhere. However, I have found that over years it has done as well as almost anything we own. It is a balanced fund, so you get fixed income along with equity so in a way, it mirrors our FI/Equity allocation.

    The other fund I sometimes look at, but have never bought, is the Mawer Balanced fund (MAW104). Has some global exposure. They also have a new one called the Global Balanced fund (MAW130). MAW104 is rated 5-star by Morningstar vs 4-star for TDB622 and 3-star for RBF448 (RBC MI)

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    It's just another balanced fund, basically. What is the advantage of buying one of these 'monthly income' funds rather than just 50/50 canadian index and bonds, such as the XIU & XBB combo?

    The only reason I can see is the return of capital, which is automatically "selling off" assets internally. If you did XIU & XBB, you'd have to sell shares manually to create the same cashflow.

    However if you don't need the cashflow and regular payout, then I don't see any advantage versus XIU & XBB.

    Even for the advantage of the regular cashflow, is that really worth the approx 1.1% extra annual fees versus using index ETFs?

  7. #6
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    in a time of slow growth and low interest rates that might continue for another decade 1.2% is too much
    the costs of investing become crucial in a time like the present
    it's too pricey imo

  8. #7
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    Yeah, it's just too big a fee. The balanced fund can be replicated using a low fee stock and bond ETF, perhaps XIC and VSB. Or alternatively, XIC + GIC ladder.

    That's fundamentally the same exposure as RBC Monthly Income or any other of these balanced funds.

    Imagine someone with 100k using one of those Monthly Income funds and unnecessarily throwing away over $1000 every year in fees!

  9. #8
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    Quote Originally Posted by james4beach View Post
    It's just another balanced fund, basically. What is the advantage of buying one of these 'monthly income' funds rather than just 50/50 canadian index and bonds, such as the XIU & XBB combo?
    The funds don't hold the same securities as XIU/XBB and the FI/Equity ratio is not necessarily 50/50. They are managed funds with different portfolios and possibly higher actual yield. If you wish to compare 50/50 XIU/XBB (or any other funds/gics) vs the three balanced funds mentioned, it would be best to use actual numbers. I did a quick check - see below.

    ROC? These bank monthly income funds don't usually pay out ROC, although it can happen if the distribution they set each January ends up being too high. 2014 was the first time that happened for TDB622.

    In the end Total Return is what we should look at - these MI funds have performed quite well after the fees are paid. So don't get too hung up on the fees.

    For example (after fee TOTAL Returns)

    10 yrs
    RBF448: 5.2%
    TDB622: 5.8%
    MAW104: 7.9%
    XIU/XBB: 5.3%

    15yrs
    RBF448: 7.3%
    TDB622: 8.2%
    MAW104: 7.7%
    XIU/XBB: 4.1%
    Last edited by agent99; 2015-10-19 at 02:16 PM.

  10. #9
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    interesting numbers 99. Thanks. I'm sure someone will pick them apart though.

  11. #10
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    As Agent said already, not directly comparable. Active mutual funds vary their equity/FI allocation and their stock picks, including ex-Canada picks in many cases. But an interesting comparison none the less.


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