Breaking News
Investing Pro 0
🚨 Our Pro Data Reveals the True Winner of Earnings Season Access Data

RBC’s $100 Billion Woman Buys More Stocks, Just Not in the U.S.

Stock Markets Nov 25, 2019 08:26AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

(Bloomberg) -- The manager of some of the largest investment funds in Canada is favoring European and Asian stocks over North American.

Sarah Riopelle, senior portfolio manager at RBC Global Asset Management Inc., boosted her equity allocation by 2 percentage points to 59% over the past month as she shifts her focus to markets outside of the U.S. and Canada.

“Valuations are very cheap, reasonable within Europe and fundamentals seem to be improving,” Riopelle, who oversees funds managing about C$130 billion ($100 billion), said in an interview at Bloomberg’s Toronto office.

More than one million Canadians are invested in funds she’s responsible for at the asset-management arm of Royal Bank of Canada, the country’s biggest bank by assets.

The price-to-earnings ratios for European and Asian benchmark equity indexes are at 14.5 and 13.7 times respectively, compared with 16.2 for the U.S. That coupled with improving economic indicators, monetary stimulus and the steepening of yield curves propelled these international markets to the forefront. Geopolitical concerns in Europe have also eased with the chances of a no-deal Brexit dropping.

Riopelle joins other strategists who have recommended buying euro-zone equities, citing the valuation discount and growth recovery prospects. EPFR Global data shows the fourth week of inflows for the region’s equity funds. Last week, the largest exchange-traded fund focused on European equities posted its biggest inflow since June 2017 in one session, according to data compiled by Bloomberg.

Portfolio flows to Asia also surged in recent weeks, pushing year-to-date equity inflows to the region’s emerging markets excluding China to about $23 billion.

After peaking at 61% two years ago, the funds had cut stocks “very gradually” to 57% this summer. “We are seeing signs that there’s some improvement in the economic metrics that make us a little bit more comfortable with a higher equity allocation. So we’ve been adding to stocks in two different trades,” Riopelle said.

She still sees value in U.S. stocks:

“We still think the U.S. market can generate positive returns over the next 12 months.”

On the long list of risks that Riopelle and her team monitor, protectionism and U.S.-China trade are a big focus. While U.S. politics hog the headlines, investors aren’t paying as much attention to it, she said. Canadian investors frequently ask about the housing market, interest rates and oil prices with half of the nation’s benchmark index heavily weighted to financials and energy stocks.

Riopelle oversees multiple funds under the Select banner, including the RBC Select Balanced Portfolio, the biggest investment fund in Canada with C$37 billion of assets. It’s returned 12% over the past 12 months, beating 88% of its peers, according to data compiled by Bloomberg.

Staying Competitive

As passive investing becomes increasingly popular, she’s also looking for new sources of alpha including private markets, which managers started entering about a year ago. The firm closed the first tranche for its RBC Canadian Core Real Estate Fund this month, raising C$1.25 billion, and has a C$8 billion mortgage business that she believes are good sources of alpha for clients.

“The traditional model of a fundamental portfolio manager picking stocks -- it’s going to be harder and harder to support that going forward,” she said.

RBC’s $100 Billion Woman Buys More Stocks, Just Not in the U.S.
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email