When Brenda Vince joined Toronto-based RBC Asset Management Inc. about 11 years ago, the fund industry was dominated by Investors Group Inc. of Winnipeg. RBCAM had a mere $15 billion in assets under management.

Scroll forward to today and RBCAM sits with a fat $84 billion in AUM, of which $80 billion is in its family of mutual funds. RBCAM now sits at the top of the heap as the largest single fund family in Canada, bigger even than Investors Group, which has $67.2 billion in AUM, excluding the funds run by affiliate Mackenzie Financial Corp.

“It once seemed like such a bold goal to catch up to Investors Group,” says Vince, a chartered accountant who began her career at RBCAM as vice president of marketing and was promoted to president in 2002. “But now we are even bigger. It’s very gratifying.”

While the banks have traditionally not been known for industry-leading performance, quartile rankings as of Sept. 30 ranked RBCAM at the top for time periods ranging from six months to five years. For example, for the six months ended Sept. 30, a rocky period that included the subprime mortgage scare of last summer, RBCAM had 88% of its AUM in the first and second quartiles for mutual fund performance. For the three-year period, the percentage was 90% of AUM; for the five-year period, it was 91% of AUM.

“There is a sustainable investment process in place, and it’s delivering good results,” Vince says. “Even during the choppy markets of the past six months, we’ve been No. 1 in the industry.”

Vince believes that one of the keys to RBCAM’s success has been its close relationship with its distribution network. Most of its funds are distributed through Royal Bank of Canada branches, although there has been a growing focus on the independent advisor channel. The latter now accounts for 20%-30% of RBCAM fund sales and has been “built out” during the past five years.

“Clients don’t just need products; they need investment solutions,” Vince says. “If you put the product out there, it’s important that it be used in the right way.”

One of the first new products launched after Vince arrived at RBCAM was Royal Monthly Income Fund, a low-volatility fund with an MER of only 1.16%. The fund, which has accumulated $8 billion in AUM, hit the spot with customers who had been relying on GICs but were finding it difficult to manage on their shrinking income streams as interest rates fell.

“We essentially created a conservative balanced fund with some solid equities that produced an income stream about equal to the five-year GIC rate at the time,” Vince says. “Clients had the ability to participate in the upside of the stocks, they had full liquidity and they weren’t locked in. The product hit a nerve, and we had $100 million in it within six weeks.”

RBCAM followed the income fund with a line of portfolio products or fund packages that tapped into another perceived client need: while RBCAM had a full line of mutual fund choices, many clients were unsure how to assemble them into a balanced portfolio that suited their needs and risk tolerance, and they had difficulty knowing when and how to rebalance.

Unlike some wrap programs, the MERs of RBCAM’s portfolios are based proportionately on the MERs of the underlying funds that make up the portfolio, which means the portfolios cost no more than if clients had assembled the portfolios themselves.

“We committed early to portfolio pro-ducts,” Vince says. “They help clients do the right things, such as making sure they are in international markets when the values are attractive, or stopping them from blowing out of fixed-income at the wrong time. Once you get people in, if the product is cost-effective and performs well, the retention rates are high. Most people are looking for a convenient solution; they don’t want to make trading decisions.”

In coming up with client solutions, RBCAM has divided its clients into three streams on the basis of assets and their need for advice: the average retail client; what Vince calls the “mass affluent”; and the high net-worth client. As the client’s net worth increases, the importance of advice in creating “value” in the relationship increases.

@page_break@Vince estimates that for retail clients, the product must deliver 80% of the relationship’s value, with advice representing 20%, as this client does not typically need the same advice as wealthier clients.

With the mass affluent, the product must offer 50% of the value, and the advisor the remaining 50%.

And with the high net-worth client, who typically requires more complicated assistance in areas such as taxes and estate planning, the product would offer about 20% of the value while the counsel provided by the advisor provides 80%.

“We’ve been firing on all cylinders to address all of these client segments,” Vince says. “We also have a growing group RRSP business.”

RBCAM was also quick to tap into investment trends by introducing hedged versions of its U.S. equity funds three years ago, in time to protect clients making U.S. investments from the strong upward movement of the Canadian dollar. As well, specialty mandates such as precious metals and energy funds were converted from Canadian funds to international funds three years ago, after the foreign-content restrictions were removed from RRSPs, giving the niche-oriented RBCAM funds freedom to roam the globe for investment opportunities.

More recently, RBCAM has introduced funds to help clients achieve a regular income, including its “T- series” which pays a monthly income amounting to 8% a year.

RBCAM’s latest venture is the launch of three socially responsible funds introduced this past July. The funds — RBC Jantzi Balanced Fund, RBC Jantzi Canadian Equity Fund and RBC Jantzi Global Equity — will be co-managed by RBCAM and SRI guru Michael Jantzi, president of Jantzi Research Inc. of Toronto. RBCAM was the first major bank to enter SRI investing, and industry observers perceive the move as one that will popularize the trend.

New products coming down the pipe will probably address clients’ need for tax-efficient income in retirement, Vince says. Retirement income will be a challenge for many Canadians as defined-benefit plans disappear and people live longer, healthier lives.

“We are committed to helping clients with their retirement income needs,” Vince says. “Until now, people have been primarily focused on accumulating financial wealth. Now they’re entering the ‘de-accumulation’ phase, and tax-efficient income is becoming more important. We’re at the beginning of this phase, in which cash flow and capital preservation are the priorities. The future of retirement is something we think about a lot.”

In addition to developing a product line, educating advisors and expanding into the independent channel, RBCAM is also beefing up its fund-management capabilities. Dan Chournous, chief investment officer, was hired five years ago to give direction to the investment team and deepen the pool of talent. There’s been a noticeable improvement in fund performance under his watch.

There’s also been a focus on lowering fees. RBCAM has reduced various fees on its funds, and has been a pioneer in developing a D-class of funds. The management fee on these funds ranges from 60 basis points to 1.25%; D-class funds are available only to clients who invest at least $10,000 and use discount brokerage RBC Direct Investing.

RBCAM also offers F-class versions of all its funds, targeting the advisors who are developing fee-based rather than commission-based businesses. “We’ve had the latitude to do a lot of things in building the business,” Vince says. “The growth has not happened by accident; it’s been a purposeful build.”

Since stepping down this fall from her role as chairwoman of the Investment Funds Institute of Canada, Vince has one less demand on her busy schedule. But she is still active on the boards of Queen’s University’s Business School Advisory Council (she’s a Queen’s graduate) and the Canadian Women’s Foundation.

Outside of work and her volunteer endeavours, Vince’s great passion is travel, and she’s looking forward to spending Christmas in Paris with her husband, securities lawyer Stephen Smith, and two sons, both of whom are in the university/college phase of life. “You have to know why you’re working,” Vince says, “and for me, travel is a big part of the reason.” IE