Investment Philosophy
The RBC GAM (US) Treasury Inflation Protected Securities (TIPS) strategy is premised on a belief in both the positive diversification benefits and inflation hedge characteristics that TIPS provide to bond investors. The firm employs the same disciplined, risk constrained investment process to TIPS that it uses in all other sectors of the bond market. Further, the firm believes that a mildly active approach to managing a TIPS portfolio can achieve modest performance above the Barclays Capital U.S. TIPS Index. RBC GAM (US) does, however, believe that the primary purpose of a TIPS portfolio is to provide an inflation hedge and will not risk losing that hedge by substantial deviations from the benchmark or related custom benchmarks with respect to clients who incorporate TIPS as part of an overall Liability Driven Investing (LDI) strategy.

Investment Strategy
The primary focus of the RBC GAM (US) TIPS strategy is on the real interest rate curve and the level of real interest rates, the expected inflation rate priced into nominal treasury yields and the relative volatility of those real yields to nominal yields. Consistent with our general fixed income processes, RBC GAM (US) will exploit market opportunities through modest duration and yield curve positioning, technical supply and demand inefficiencies created by auction dynamics, break even spread analysis, and certain seasonal factors related to non-seasonally adjusted inflation indices.

RBC GAM (US) will primarily invest in United States Treasury inflation-protected securities but may consider inflation-indexed bonds issued by U.S. Agencies, U.S. government instrumentalities, and government agency nominal securities.