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Wealth Management
Review
COVID-19 UPDATES > www.rbcwealthmanagement.com | July 2020
The road to normal
By Jim Allworth
Markets and the economy have both come a very long way in a
short time. The year began with complacent expectations that
Do you hold a RRIF? 2020 would be another year of decent growth in GDP, corporate
You have the option to reduce earnings and share prices. COVID-19 was thought to be a big
your minimum required RRIF problem for China but unlikely to produce a direct hit to North
payment by 25% for 2020 under America and Europe.
federal government COVID-19
relief measures. Before February ended, the world • Reopening of regional
had turned upside down: share prices economies might reverse the
This is a temporary reduction had fallen massively, economies were downward trend in infections
for 2020 only, and is intended to shutting down and borders closing. and send the number of new
help older Canadians preserve Simultaneously, policy-makers cases sharply higher once again.
the value of their RRIFs by undertook unbelievably huge To some extent, that appears to
avoiding liquidating assets monetary and fiscal stimulus efforts have happened in places like
unnecessarily during volatile to head off a credit crunch and bridge Florida and Arizona, although
markets. finance the consumer and industrial so far the number of new deaths
If you haven’t already taken your economy. has not followed suit. If this
minimum RRIF payment, and the proves a big enough threat, then
By April, the number of new daily closures and/or restrictions
reduction may be appropriate
COVID-19 cases had peaked or could be re-imposed, a blow to
based on your individual
was peaking and heading lower already-tentative consumer and
circumstances and income flow,
throughout the developed world. By business confidence.
you may wish to consider this.
May/June, the process of reopening
Please note that we are not many economies was under way. • On the science front, the eagerly
automatically reducing RRIF awaited vaccine candidates
payments to the new minimum. Still a wildcard already in trials might prove to
If you wish to reduce your Things are likely to go on changing be ineffective, dashing hopes
payment, you must contact your quickly for some time yet. The virus for an early remedy. There are
Investment Advisor. itself could throw curveballs, any one at least 135 vaccine candidates
of which might either reignite a surge in development, of which seven
in new cases or further stimulate the are in Phase 1 trials, seven in
pace of economic recovery. Among Phase 2, and one in Phase 3.
the negative concerns: Phase 2 trials are where most
Continued on page 2
RBC Dominion Securities Inc.
Page 2 of 4
The road to normal
Continued from page 1
vaccine candidates founder. By Beyond the crisis values then available and the
one estimate, there is only a In an environment where such prospects for a return to economic
30% chance that a prospective volatility is clearly possible, maybe growth post-crisis, was the wrong
vaccine that makes it to Stage even widely expected, it makes it thing for a portfolio investor to do.
2 will go on to be an approved, difficult for investors to focus on By the same token today, ignoring
effective therapy. long-term values. We think it’s worth the considerable scope for nearer-
repeating a point we made in this term volatility and disappointment,
There are also possibilities for at a point when share values are
space back in April:
COVID-19 virus developments to much fuller and no longer mouth-
deliver upside volatility: “The ‘value’ of the market [or of an wateringly compelling, would seem to
individual business] is the present be repeating the same mistake in the
• A vaccine or anti-viral therapy
value of all future earnings. Looked opposite direction.
shown to kill the virus, and/or
at that way, even big unexpected
confer immunity, would likely One foot in
changes in the near-term earnings
deliver a big boost to equity
outlook shouldn’t have a large impact In our view, the goal of a portfolio
prices.
on the market value of corporations. investor should be to own for as
• The virus could weaken of its But they usually do because, for a long as possible the high-quality
own accord. Health authorities while, investors come to believe that businesses most likely to thrive and
first in Italy then more recently the performance of the economy grow in the future, thereby allowing
in New York City (both epicenters and market today are pointing to an their usually high internal rates of
of huge outbreaks, since tamed) altered trajectory for economic and return to compound on behalf of
have recently reported that, in a earnings growth in the future. shareholders. At the same time, we
matter of a few weeks, the virus think it’s advisable to lean against
“Looking back at a century of risks that arise in the economic and
in their locales has changed
pandemics, wars, nuclear disasters business environment when they
dramatically for the better. They
and more, that sort of conclusion become higher than normal.
report that many fewer infections
has not been useful. Within a year or
require hospitalization, while a
two the forces of global population We would reconcile those behaviours
significantly smaller proportion
growth and rising prosperity would today by being invested in equities
of those hospitalized require
reassert themselves and before but not “with both feet.” We think
ventilation or intensive care.
that stock markets would go back a balanced portfolio should be
A big drop in the death rate could to capitalising future earnings somewhat shy of its long-term target
induce a meaningful decline in an appropriately.” exposure to equities. That will add
individual’s assessment of their to staying power if more downside
Arguably that is what has been volatility were to materialise in the
personal health risk or the liability
happening since stock markets fall, and leave a buying reserve
risk facing a business. This, in turn,
bottomed and turned higher in late should more attractive prices become
would boost consumer and business
March. Investors have stopped available. The cost of this approach
confidence and open the door to
focusing on what appeared in March if markets were to go on appreciating
further normalisation of conditions.
to be open-ended downside for the would be the extra returns forgone on
There are many, largely unpredictable, economy and the stock market, and the buying reserve.
potential outcomes, directly and have begun to value businesses on
indirectly flowing from the course of their prospects beyond the pandemic For our most current outlook for the
the pandemic that could either make – when the trajectory of the economy markets, please ask for our latest
the stock market surge higher or lurch and earnings is likely to be positive issue of Global Insight.
lower from here. and not too dissimilar to what it was
Jim Allworth is co-chair of the RBC Global
in the years leading up to this crisis. Portfolio Advisory Committee.
Focusing solely on the crisis-driven
downside at the bottom in March,
while ignoring the compelling market
Page 3 of 4
Introducing the new
RBC Wealth Management Online
Getting to know the new • Please help us improve the website • More holistic navigation structure
website by providing your feedback. We’ve to help you find what you are
already received a tremendous looking for, including a consolidated
Our previous website, DS Online, served
amount of feedback from our overview of your entire portfolio
us very well for many years, and we had
clients. We’re listening, and we’re • Homepage dashboard that provides
reached the stage where we needed to
committed to continually improving important information at a glance,
upgrade to make digital enhancements
the website to make it better for while allowing you to get a more
for the future. As with any new website,
you. To provide your feedback, detailed and customized view
it can take some time to get familiar
please click on the “feedback”
with the new RBC Wealth Management • Enhanced account information on
button on the right-hand side of
Online. Here are some tips to help you performance and products
your Homepage.
get the most from the new website: • Flexible data columns that let you
Signing in choose what you wish to see
• We have noticed that some clients
with older Internet browsers or
• Easier access to your eDocuments,
With the new RBC Wealth Management
including account statements and
computer operating systems find Online, you can view your account
tax slips
the new website performs better information safely from home, or
if they update their browser or wherever it’s convenient for you.
Benefits of RBC Wealth
operating system. You may wish
to consider using the most recent To log in to the new website, go to Management Online
version of the Google Chrome www.rbcds.com and click on “Sign in”
at the top right. You can use your old Convenient
browser.
password from the previous website, View your latest account
• We invite you to take the tours.
DS Online. If you don’t have a password, information, important
There’s much that’s new and documents and market
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different about RBC Wealth commentary wherever and whenever
simply contact your Investment Advisor.
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show me button at the top right
What’s new Access your accounts
to take tours of the new Homepage,
Holdings, Settings and more. With the new RBC Wealth Management safely and securely
Online, you can keep track of your View your account
• We’ve created how-to guides
investments on your desktop, tablet or information any time
for everything from setting up
mobile. Plus, we’ve made the following from the convenience
eDocuments to sending us secure
changes: of any personal computer or device
messages. Simply ask your
with secure Internet access. Find out
Investment Advisor team for any
the value of your investments. Check
guides you need.
Continued on page 4
Page 4 of 4
RBC Wealth Management Online ... Continued from page 3
your transactions and the status of custom “watchlists” each containing To learn more, please contact your
your trade orders. Do so knowing up to 100 securities. And you’ll receive Investment Advisor team.
your privacy is protected by your exclusive market commentary and the
confidential password and advanced latest business news.
encryption technology.
Connect with RBC Online
Reduce your Banking
paperwork with Click to RBC Wealth
eDocuments Management Online through
Access key documents RBC Online Banking, and
such as statements, view all of your various RBC accounts.
tax slips, annual reports, trade You can also transfer funds from your
confirmations and prospectuses at any RBC Royal Bank accounts to your RBC
time to reduce your paperwork and help Dominion Securities accounts.
the environment. You’ll have current
documents at your fingertips, plus a Coming soon
seven-year archive. And, right now, We will be making regular updates
when you switch to eDocuments, we will to RBC Wealth Management Online,
plant a tree in your honour through our including:
partnership with Tree Canada.
• user experience improvements
Get timely market based on client feedback
information
• functionality enhancements
Obtain detailed quotes
for stocks and options • a new mobile experience within the
listed on Canadian and U.S. markets, RBC mobile app that enables you
and daily closing prices for mutual to review your portfolio anytime,
funds. Plus, you can create up to 50 anywhere.
Empowering older Canadians with personal
and financial planning
RBC Wealth Management recently their finances, plan for their future and Canadians better prepare themselves
formed a strategic partnership with The protect themselves and their wealth will protect us all.
National Institute on Ageing at Ryerson from fraud.
To learn more, please contact your
University. Working together, we can
Canada’s baby boomers are Investment Advisor.
share our expertise in financial literacy
contributing to a larger-than-ever
and cyber security to help organizations
aging population, and helping older
educate older people on how to manage
This information is not investment advice and should be used only in conjunction with a discussion with your RBC Dominion Securities Inc. Investment Advisor. This will ensure that your
own circumstances have been considered properly and that action is taken on the latest available information. The information contained herein has been obtained from sources believed
to be reliable at the time obtained but neither RBC Dominion Securities Inc. nor its employees, agents, or information suppliers can guarantee its accuracy or completeness. This report
is not and under no circumstances is to be construed as an offer to sell or the solicitation of an offer to buy any securities. This report is furnished on the basis and understanding that
neither RBC Dominion Securities Inc. nor its employees, agents, or information suppliers is to be under any responsibility or liability whatsoever in respect thereof. The inventories of RBC
Dominion Securities Inc. may from time to time include securities mentioned herein. Using borrowed money to finance the purchase of securities involves greater risk than a purchase
using cash resources only. Should you borrow money to purchase securities, your responsibility to repay the loan as required by its terms remains the same even if the value of the
securities purchased declines. RBC Dominion Securities Inc.* and Royal Bank of Canada are separate corporate entities which are affiliated. *Member-Canadian Investor Protection Fund.
RBC Dominion Securities Inc. is a member company of RBC Wealth Management, a business segment of Royal Bank of Canada. ® / ™ Trademark(s) of Royal Bank of Canada. Used under
licence. © 2020 RBC Dominion Securities Inc. All rights reserved. 20_90081_1045
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