Q: Hi - I resend the question about this product, a “smart” GIC:
RBC® Canadian Banking MarketSmart GIC.
What do you think, for a RRIF, could be an alternative to VRIF?
Thanks
RBC® Canadian Banking MarketSmart GIC.
What do you think, for a RRIF, could be an alternative to VRIF?
Thanks
5i Research Answer:
Note the interest advertised is to term, not the annualized rate. So the 7% minimum is the total return over two years, so much lower than current GIC rates. Yes, there is the potential for 'more' if the banking sector does well. But we would consider it very different from VRIF. Investors are giving up potential gains in exchange for the rate guarantee. The notes are CDIC insured, but cannot be sold ahead of maturity. We would rather see an investor own a GIC and a bank ETF. This would accomplish the same thing, essentially, but with lower fees and no capped upside.