RBC is launching two Guaranteed Investment Certificate (GIC) products with one based firmly on ESG principles. Specifically, the bank is rolling out the RBC ESG Market-Linked GIC and RBC North American MarketSmart GIC.

The ESG-focused GIC is purpose-built for Canadians who want their investments to help make a difference in the world. Meantime, the North American GIC is linked to a basket of 20 stocks designed to help clients diversify their portfolios.

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RBC’s Flora Do discusses the product launches with RBI editor Douglas Blakey

Moreover, the GIC’s guarantee investors’ principal sum invested, while providing potential to gain from market returns.

Both new products were developed through a partnership between RBC Capital Markets and the GIC business within the retail bank. As a result, RBC is leveraging their respective areas of market expertise and product knowledge.

Global index of environmentally and socially responsible organisations

The RBC ESG Market-Linked GIC represents a first for the bank. This ESG GIC is linked to a global index of environmentally and socially responsible organisations. All firms selected for inclusion must first pass a set of rigorous ESG standards. Metrics include low carbon impact and strong financial health.

The RBC North American MarketSmart GIC is the first GIC of its kind at RBC to track the performance of a customised basket of stocks in 20 North American companies. This select basket brings investors the opportunity to invest in some of North America’s largest and most recognised organisations.

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Examples included Bell, Coca-Cola, Pfizer, Johnson & Johnson, Canada’s Big Five banks and McDonald’s.

Flora Do, VP Term Investments & Savings, RBC tells RBI: “We know investors are looking for higher yields. This is particularly so in a low interest rate environment – while minimising risk. Both of these new GICs help make that possible.

Meeting consumer demand for socially responsible investment

“In recent years, we’ve also seen a growing focus on looking beyond a company’s balance sheet when making investment decisions. ESG investing is a strategy for anyone who values the added layers of analysis in assessing a company’s outlook. And wants to take ESG factors into account when making their investment decisions.”

As with traditional GICs, an investor’s initial investment in these two new products is 100% guaranteed. Unlike traditional GICs, both are linked to market performance. This means investors benefit from potential gains from stock market returns. There are no minimum or maximum returns for clients investing in the RBC ESG Market-Linked GIC. There is a maximum cap, with a guaranteed minimum return, for investors in the RBC North American MarketSmart GIC.

“For those who want the opportunity to diversify by investing in a market that has historically outperformed other developed regions around the world, our North American basket provides just that,” adds Do. “Both our new GICs are for investors who want the potential to earn higher returns than those offered by traditional GICs, with the security of having their principal completely protected.”

RBC ESG Market Linked ESG AT-A-GLANCE

  • Term length: Terms of 4 and 6 years (non-redeemable and non-transferable);
  • Minimum deposit: $1,000;
  • Underlying investment: MSCI World ESG Quality Select Low Volatility Index;
  • Eligible plans/accounts: RRSPs, TFSAs, RESPs, RDSPs, non-registered Investment Accounts.
  • Returns: Variable; calculated using a pre-determined formula; paid at maturity. Investors can fully benefit from the index’s growth, with no minimum or maximum rates of return.

RBC North American MarketSmart GIC AT-A-GLANCE

  • Term length: Terms of 2, 3 and 5 years (non-redeemable and non-transferable
  • Minimum deposit: $1,000
  • Underlying investment: equally-weighted investment in 20 hand-picked North America stocks
  • Eligible plans/accounts: RRSPs, TFSAs, RESPs, RDSPs, RRIFs, non-registered Investment Accounts
  • Returns: variable; adjusted to a guaranteed minimum or maximum return; paid at maturity.
  • Similar to other RBC MarketSmart GICs, if the basket of stocks performs well, the potential returns for investors increases as well. If the stocks underperform, the initial investment remains fully protected plus investors receive the guaranteed minimum rate of return.