RBC Funds Inc. are introducing the Royal Tax Managed Return Fund, a new balanced fund that gives investors the opportunity to generate better cash flow from their investments.

The Royal Tax Managed Return Fund is designed to provide a tax-efficient monthly distribution of 8¢ per unit, or 9.6% on the initial unit price of $10.00. It is appropriate for investors in a non-registered portfolio, with a moderate risk profile, who wish to maximize their after-tax cash flow, perhaps in their early retirement years. It will be managed in-house by RBC Global Investment Management.

Most of the fund’s distributions will be treated as a return of capital. The return of capital not only lowers investors’ taxable income, it also reduces the cost base of their holdings. Also, investors can manage their tax liability with greater control since they may determine for themselves when to realize capital gains.

“More cash flow and less tax are the goals for many investors,” says George Lewis, Chairman and CEO, RBC Funds Inc. “A large part of this fund’s distributions will be treated as a return of capital, giving investors tax benefits that traditional sources of income do not provide.”

“As long as investors remain in the fund, they may continue to defer payment of taxes on the portion of the distributions characterized as a return of capital,” said Lewis, “Furthermore, if they move into a lower marginal tax bracket when they do eventually sell the units, investors may enjoy a net tax savings.”