RBC’s asset management arm names Stu Kedwell as chief investment officer

Royal Bank of Canada’s RY-T asset management division has chosen Stu Kedwell as its next chief investment officer, elevating a fund manager who has deep roots at the bank and who commands broad respect on Bay Street.

On Thursday, RBC Global Asset Management announced that Mr. Kedwell will take over as Global CIO on Jan. 31, the same day that Dan Chornous – who has held the role for 23 years – retires after 45 years with the bank.

Mr. Kedwell, a senior portfolio manager and current global head of equities, is no stranger to the team of more than 400 investment professionals he will lead at RBC GAM. He has spent nearly 30 years in various roles at RBC and worked closely with Mr. Chornous since 1999.

“Our investment styles, our beliefs about markets: I don’t think you could find more consistency in an investment firm,” Mr. Kedwell said in an interview.

How RBC’s Stu Kedwell mixes Canadian and U.S. stocks to beat market index

Mr. Chornous played an instrumental role in the growth of RBC GAM, helping lead major acquisitions of independent competitors – particularly the 2008 purchase of Phillips, Hager & North Investment Management and the addition of BlueBay Asset Management in 2010.

“Mr. Chornous’s ability to anticipate and respond to market trends, navigate complex economic landscapes, and mentor a generation of investment professionals has left an indelible mark on the firm,” RBC said in a statement.

Many of the investment tools and frameworks Mr. Kedwell and Mr. Chornous developed together decades ago are still in use today.

Mr. Kedwell has earned a reputation as a thoughtful and influential equity investor who is often one of the first calls for senior executives looking to drum up support for deals or bolster interest in their stock. With the scale of RBC’s asset management business, which now manages $700-billion in assets globally, his investment decisions have often set trends that other fund managers followed.

At a frothy moment for stock markets, when hype about artificial intelligence and major technology companies is driving much of the gains for index investors, Mr. Kedwell said RBC’s approach is still anchored by the three fundamentals of equity investing his team hunts for: rising revenue, widening margins and improving valuations.

“It’s some factor of those three things, all the time. So, we want to study each of the three,” he adds.

One of their favourite lines comes from the TV comedy Ted Lasso: “Be curious, not judgmental,” Mr. Kedwell said. “There are lot of asset managers that are curious, but you can be dismissive of things quickly based on biases.”

The classic approach to value investing that Mr. Kedwell espouses has helped the $9.1-billion RBC North American Value Fund, which he will continue to run with co-head Doug Raymond, perform well against comparable benchmark indexes.

Of late, the mix of assets in that fund has leaned toward Canadian companies, and over all, “we’ve tilted toward non-U.S. stocks,” he said.

He’s not ready to predict the end of U.S. exceptionalism but said that some of the key factors that have driven American outperformance for decades are under pressure.

“A stronger U.S. dollar is unlikely to be the same tailwind that it was. Rising valuation is unlikely to be the tailwind that it was,” he said. “So, two of the three tailwinds are likely dissipating, and will U.S. earnings growth continue to outpace the world?”

For now, there are often better valuations to be found elsewhere in the world, he said.