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Why active management matters for fixed income Let's be honest - fixed income can get complicated fast. Between navigating diverse bond sectors, analyzing yield curve dynamics and monitoring credit quality across multiple jurisdictions - the complexity can overwhelm even seasoned investment professionals. Most advisors simply don't have the time to manage all these moving parts themselves. This is exactly why actively managed fixed income funds like RBC's Fixed Income Pools make sense. Advisors can rely on dedicated fixed income specialists to provide their clients with all the benefits of an actively managed portfolio without the time and brain power required to do it themselves. It's a one-ticket solution that delivers built-in diversification, rebalancing and tactical adjustments - making fixed income easier, smarter and far less time-consuming to manage. Capitalizing on market opportunities helps deliver enhanced returns Active managers add value by making decisions that a static benchmark simply can't. They adjust duration in response to interest rate changes, actively manage credit exposure and diversify across sectors and geographies. They also use tactical allocation to adjust the asset mix as new opportunities in markets arise to generate incremental value in the portfolios and mitigate risks as market events unfold. The first chart shows the growth of $100,000 invested in the actively managed RBC Fixed Income Pools since their inception on August 20, 2018, versus the FTSE Canada Universe Bond Index. The Conservative, Core and Core Plus pools outperformed the index by 72 to 109 basis points annually net of fees, depending on the fund. This outperformance represents the value added from making tactical allocation decisions based on the current market environment. Diversifying helps reduce volatility One of the biggest advantages of actively managed fixed income funds is the diversification they can offer. For example, RBC Fixed Income Pools can invest across a wide range of fixed income markets, including: • Canadian investment-grade bonds • Global government and corporate bonds • High-yield debt • Emerging market debt • Active currency exposure This broader opportunity set helps spread out the risks and create more consistent sources of return. As the chart below shows that over the past five years, RBC Fixed Income Pools have delivered not only higher returns but also lower risk than both the median peer group and the FTSE Canada Universe Bond Index. It's a clear example of how active diversification and tactical asset allocation can improve your clients' risk-return profile. See chart 2 Access to lower-cost managed solutions RBC Fixed Income Pools are structured to provide a very cost-effective way to access diversified bond portfolios. The table attached shows the current series F management expense ratios (MER) for RBC Fixed Income Pools versus what it would cost to buy all the underlying funds individually. There are significant cost savings with the Pools - saving 0.10% to 0.21% in management fees compared to the do-it-yourself approach. Final thoughts At the end of the day, actively managed fixed income is about making a complex part of the portfolio easier to handle. For advisors, it means you can outsource the day-to-day monitoring and tactical decisions within your clients’ bond portfolios, freeing up your time to focus on what matters most - your clients and their goals. With professional oversight, enhanced diversification and cost savings, these solutions can help improve outcomes and provide more consistency than a passive approach. by Julia Sirbovan, RBC Associate Portfolio Analyst, RBC Global Asset Management Inc.