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Mutual funds and ETFs have become staples in many Canadian investors’ portfolios. But when it comes to managing these funds, what does it take to succeed? To Stu Kedwell, the newly appointed chief investment officer at RBC Global Asset Management, there are a few touchstones. “Ask the right questions. Use the best available evidence. Stay humble when markets surprise you. And above all, remember who you’re doing it for.”
Those ideals have guided him since joining RBC GAM more than 20 years ago. Most recently, Mr. Kedwell was global head of equities. He has also led the firm’s Canadian and North American equity teams and helped build RBC North American Value Fund into a multibillion-dollar strategy, which he’ll continue to co-manage with his long-term investing partner, Doug Raymond.
Mr. Kedwell’s mindset – disciplined, analytical and steady in the face of uncertainty – sits at the core of how he thinks about investing client capital as he embraces his new role, which he stepped into on Jan. 31.
This is a seamless leadership transition. Mr. Kedwell worked closely with his predecessor, Dan Chornous, who was CIO since 2002.
During that time, Mr. Chornous guided RBC GAM through multiple market cycles, industry consolidation and the firm’s evolution into a global investment platform. He oversaw the acquisition of Phillips, Hager & North Investment Management in 2008, and U.K.-based BlueBay Asset Management in 2010. Under his leadership, RBC GAM grew its assets under management to approximately $800-billion from $34-billion, and doubled both the size of the investment team and the number of solutions offered to clients across the globe.
Mr. Kedwell aims to build on this legacy, with a leadership style grounded in practicality. Financial models and forecasts are essential, but they coexist with human behaviour, liquidity dynamics, emotion and forces that don’t always appear neatly in textbooks. “I bring a healthy dose of realism,” he says.
He has forged his views across multiple crises: the Asian financial and Russian debt crises in the late 1990s, the dot-com bubble that peaked in 2000, the 2008-09 global financial crisis, and the more recent COVID-19 pandemic and interest-rate shocks. He notes that some crises are driven by valuation excesses and macro dynamics, others by balance-sheet stress and credit contraction.
“A lot of financial crises rhyme. While they don’t happen frequently, living through them and studying history gives you an understanding of what causes excess and how it gets resolved,” he says.
Having a clear sightline across asset classes, from a deep roster of experienced investment teams, enables RBC GAM to assess whether a market drawdown is a valuation reset or something more systemic.
Mr. Kedwell often points to the firm’s fixed income and credit expertise as critical advantages. Equity volatility alone can be noisy, but tightening liquidity and widening spreads are harder to ignore.
“Credit spreads are probably the most dominant signal about real stress in the market. When borrowing costs rise, that changes a lot of things quickly,” he says.
Cross-asset awareness feeds into RBC GAM’s broader investment approach. The firm establishes a clear view of the economic and market environment, but remains attentive to what markets and assets themselves are signalling. He likens it to shopping with a list: you know what you came for, but still notice what’s on sale.
That selectivity is also why Mr. Kedwell champions active management, especially as advisors and investors prepare for the scrutiny of total cost reporting (TCR). He calls active management “the option that never expires.”
Unlike passive strategies, which can often be locked into static exposures, active portfolios can dial risk up or down as conditions change. Sometimes, they lean closer to benchmarks; at other times, they deliberately step away. That flexibility has value.
“To hit the notes you want, sometimes you need the accordion out, sometimes in. You always have the ability to adjust,” Mr. Kedwell says.
TCR will increase the focus on the value received for active management within portfolios. Among the factors that justify the fees: working with a firm that has continuity in its investment process, a deep bench of investment talent, and a history of delivering steady long-term performance through multiple market cycles.
“Capital markets have been wonderful contributors to individuals’ financial plans over time. Knowing that your portfolio benefits from experience and the thoughtful evaluation of risk and return relative to the expectations of each mandate, coupled with transparent communication about what is going on within your portfolio, allows you to stick to your plan to harvest the benefits,” says Mr. Kedwell.
He argues that TCR should sharpen, not diminish, the conversation between advisors and clients. Investors don’t arrive with fee targets, but with objectives. The role of advice and asset management is to offer solutions that maximize the probability of achieving those goals within an acceptable risk profile.
That philosophy reflects the culture that Mr. Chornous helped instill at RBC GAM. As the asset manager has expanded its global footprint – and built a diversified platform spanning active, passive, quantitative and alternative strategies – Mr. Kedwell has been an integral part of the story. Now as the new CIO, he is eager to help write the next chapter for RBC GAM and its clients.
Disclosure:
This has been provided by RBC Global Asset Management Inc. (RBC GAM Inc.) and is for informational purposes, as of the date noted only. It is not intended to provide legal, accounting, tax, investment, financial or other advice and such information should not be relied upon for providing such advice. RBC GAM Inc. takes reasonable steps to provide up-to-date, accurate and reliable information, and believes the information to be so when provided.
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Advertising feature produced by Globe Content Studio with RBC Global Asset Management. The Globe’s editorial department was not involved.