RBC Asset Management Inc. and Phillips, Hager & North Investment Management Ltd. Tuesday announced a change to the way operating expenses are charged to the RBC Private Pools and PH&N Funds.

The result of is improved cost certainty and fee transparency for mutual fund investors, the companies said.

Beginning November 1, RBC AM and PH&N will pay the majority of operating expenses for each of the RBC Private Pools and PH&N Funds in return for a new fixed administration fee, which will be paid by the funds to RBC AM and PH&N. RBC Private Pools and PH&N Funds will continue to pay expenses related to the independent review committee, the cost of any new government or regulatory requirements introduced after July 1, 2009, and any borrowing costs (other fund costs) and taxes payable by the funds.

“We always aim to be a leader in delivering value to investors and these changes provide unitholders with greater certainty about the cost of investing,” says John Montalbano, head of RBC Global Asset Management. “In 2007, RBC AM implemented fixed administration fees for all RBC Funds, which resulted in more stable and predictable management expense ratios (MERs). We remain committed to industry leadership when it comes to low fund management fees.”

RBC AM says this change improves the predictability of the MER for each series of units. The MER will consist of each series’ management fee, fixed administration fee, other fund costs and taxes – including the GST (all expressed as a percentage of the fund’s average net assets for that year).

RBC AM and PH&N referred this issue to the independent review committees of the RBC Private Pools and the PH&N Funds. The committees concluded that the proposed change is fair and reasonable.

RBC Target Education Fund MER reductions

The RBC Target Education Funds gradually shift their asset mix from an emphasis on equity funds to drive growth in their early years to fixed income and money market funds as their target date approaches and capital preservation becomes key. The result is an asset mix that evolves over time, becoming more conservative as a child’s target education date approaches. As each RBC Target Education Fund becomes more conservative, the MER for that fund will be reduced to reflect the more conservative asset mix.

The current MERs, the effective dates of the reductions and the reduced MER rates are as follows:

RBC Target 2010 Education Fund
Current, 1.00%

RBC Target 2015 Education Fund
Current, 1.75%
Jan. 1, 2010, 1.55%
Jan. 1, 2013, 1.00%

RBC Target 2020 Education Fund
Current, 1.85%
Jan. 1, 2010, 1.75%
Jan. 1, 2015, 1.55%
Jan. 1, 2018, 1.00%

RBC Target 2025 Education Fund
Current, 1.95%
Jan. 1, 2010, 1.85%
Jan. 1, 2015, 1.75%
Jan. 1, 2020, 1.55%
Jan. 1, 2023, 1.00%

IE