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InsightsRBC Portfolio Solutions

Spring 2021 edition

Navigating the new normal The COVID-19 pandemic changed our world almost overnight. Businesses shifted to new ways of serving their customers. Consumers changed the way they shopped, bought groceries and more. We all adapted to new rules around social distancing and wearing masks. We can all agree, we are living in a new normal.

This quarter, we asked several members of our investment team for their views on the current environment and what it means for your portfolio in 2021.

Vaccines appear to be a genuine game-changer.

Central banks to keep interest rates low.

Corporate earnings should continue to beat

expectations in 2021.

Reasons for optimism

The path forward with RBC Global Asset Management This past year has shown us that life can be unpredictable. The same goes for financial markets. Regardless of what the future holds, you can be confident that the 300+ investment professionals located in key markets around the world are working to keep your portfolio well positioned as market conditions change.

Habib Subjally, Senior Portfolio Manager & Head of Global EquitiesRBC Global Asset Management (UK) Limited

The global pandemic showed that businesses with strong environmental, social and gover-nance (ESG) strategies can be highly resilient. In 2021 we expect these businesses to seize the opportunities presented by the economic recovery and structural change. We will use our disciplined investment

process to harness the value they create in a portfolio of best ideas for our clients.

Global equities show strength:

30+ yearsof asset allocation experience

23 teamsThe number of investment teams globally

7 cities 3 continents

Dagmara Fijalkowski, Senior Vice President & Senior Portfolio Manager, Head of Global Fixed Income & Currencies

Overall, we don’t expect a significant change in bond yields over the next year. Central banks are likely to be slow to raise interest rates in 2021. This will keep bond yields at relatively low levels. While returns for government bonds have been hit the hardest this year, other sectors of the fixed income market have done better, highlighting the benefit of diversification. We remain well positioned to weather these times of rate volatility and provide our clients with a relatively attractive risk/return experience.

Finding opportunity in fixed income:

Stu Kedwell, Senior Vice President & Senior Portfolio Manager, Co-Head of North American Equities

Scenario analysis is the most important tool we have to help us assess the strengths of different investments. As we move closer to the end of the COVID-19 pandemic, we see the recovery potential in a number of our holdings. This underpins our cautiously optimistic outlook for 2021.

Cautiously optimistic for North American equities:

Eric Lascelles, Chief Economist

One might describe 2021 as the year of the vaccine. The nature of the economic recovery will depend on the effectiveness of the global vaccine program. Given the progress so far, we expect a return to normal in many ways over the second half of 2021.

All eyes on the vaccines:

Sarah Riopelle, Vice President & Senior Portfolio Manager Investment Solutions

Being effectively diversified has taken on new meaning. Structural changes in the economy and markets mean that what has worked over the last decade may not continue to do so. Our 30-plus years of experience in building and managing portfolios has made one thing clear: evolving our asset mix as market conditions change has been, and will continue to be, key for investors.

A new era of diversification:

What will the new normal bring to your portfolio?Our investment team weighs in.

Spring 2021Insights RBC Portfolio Solutions

Portfolio manager viewpoint Sarah Riopelle, CFA , Vice President & Senior Portfolio Manager, Investment SolutionsThe pandemic is entering a new phase with vaccines at hand and businesses gradually resuming normal operations. Our base case scenario is quite constructive as economic forecasts were mostly upgraded from last quarter and remain above consensus. The key risk, in our view, is containment of COVID-19, especially its variants. Against this backdrop, bond yields surged as inflation expectations

increased and real interest rates rose, dampening the acute valuation risk that existed in the bond market. Within equities, we recognize there is froth in some areas and that valuations are elevated as indices reach new records, but compelling upside exists outside of U.S. large-cap technology and momentum stocks. Although rising yields have diminished the advantage of stocks over bonds somewhat, equities continue to offer an attractive risk premium versus bonds.

All opinions contained in this document constitute our judgment as of March 31, 2021, and are subject to change without notice. RBC Funds, PH&N Funds and BlueBay Funds are offered by RBC Global Asset Management Inc. and distributed through authorized dealers in Canada. RBC Global Asset Management (RBC GAM) is the asset management division of Royal Bank of Canada (RBC) which includes RBC Global Asset Management Inc. and RBC Global Asset Management (UK) Limited, which are separate, but affiliated corporate entities. Please consult your advisor and read the prospectus or Fund Facts documents before investing. There may be commissions, trailing commissions, management fees and expenses associated with mutual fund investments. Mutual fund securities are not guaranteed, their values change frequently and past performance may not be repeated. The indicated rates of return are the historical annual compounded total returns for the periods indicated including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any unitholder that would have reduced returns. ® / ™ Trademark(s) of Royal Bank of Canada. Used under licence. © RBC Global Asset Management Inc. 2021

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For the complete Spring 2021 Global Investment Outlook, please visit rbcgam.com/gio

Canadian equities S&P/TSX Composite Index

U.S. equitiesS&P 500 Index

Global fixed incomeFTSE World Government Bond Index (CAD hedged)

International equitiesMSCI EAFE Index

Emerging market equitiesMSCI Emerging Markets Index

Markets this quarter1

Insights RBC Portfolio Solutions | Spring 2021

Canadian fixed incomeFTSE Canada Universal Bond Index

1 All returns are in C$ except where indicated. Canadian, U.S., International and Emerging Markets index returns are total returns. An investment cannot be made directly into an index. The above does not reflect transaction costs, investment management fees or taxes. If such costs and fees were reflected, returns would be lower. Past performance is not a guarantee of future results.

-5.0% -3.1% +8.1% +4.8% +2.2% +1.0%