With a low correlation to traditional asset classes, a well-managed long/short strategy can further diversify your clients’ portfolios. Portfolio managers can take advantage of underperforming stocks by adding short positions, potentially providing meaningful downside protection. This gives a long/short strategy a unique benefit of generating returns from both rising and falling stock prices.
The RBC North American Equity Team
The team has a long track record of successfully managing equity portfolios. The touchstone of their process is a commitment to understanding a wide variety of outcomes for the stocks they follow.
portfolio managers and analysts
in assets under management
of combined experience
RBC Long/Short North American Equity Fund extends the team’s prior long-only scenario-based approach, adding short exposure where the range of outcomes are sufficiently less favourable than market expectations. They do this by:
- Focusing on a range of outcomes for future financial stock performance
- Avoiding attachment to any single forecast
- Assessing probability-weighted outcomes of a range of scenarios
- Initiating long and short positions reflective of the most favorable risk / reward
- Continuously recalibrating views
Long exposure may range from 0-200%.
Short exposure may range from 0-100%.
Sector allocation is focused on industries offering the most dispersion and stock-picking opportunity.
Geographic split between U.S. and Canadian equity is based on the bottom-up opportunity set.
Typical holding size is 3% for long positions and 1-2% for short positions.
Absolute returnsAims to provide consistent equity returns with meaningful alpha during drawdowns.
DiversificationSeeks to provide a lower correlation to traditional asset classes, focusing on industries with the greatest stock-picking opportunity.
ExpertiseManaged by the RBC North American Equity team. Their investment approach is collegial, systematic, iterative and repeatable and has been honed since 2002.
- Portfolio engineering capabilities are embedded into the team, tasked with enhancing the portfolio managers’ understanding of the risks within their portfolio and continuously refining their investment process.
- Proprietary software is employed to better understand and manage factor exposures. These tools were developed specifically for the mandates run by the RBC North American Equity team.
- Risk limits on position sizing and leverage are embedded in the strategy. These are described in the mandate guidelines and overseen by RBC GAM’s Investment Risk Management team, which reports to the Chief Investment Officer.
To learn more about RBC Long/Short North American Equity Fund, speak to an advisor.