Royal Mutual Funds, a subsidiary of Toronto-based Royal Bank of Canada, is set to launch next month three mutual funds that will follow a "strategy indexing" formula.

The Royal Strategic Index Funds will follow a strategy developed by James O'Shaughnessy, who runs O'Shaughnessy Capital Management Inc., Greenwich, Conn. The firm will act as a subadviser for the funds, said Brenda Vince, vice president in charge of marketing at Royal Mutual Funds.

The two U.S. funds will focus on growth and value strategies, respectively, tracking 50 companies that are traded on the three largest equity exchanges in America, said Mr. O'Shaughnessy.

The value strategy focuses on "big market-leading companies with high dividend yields," he said. "The growth strategy focuses on stocks that are cheap and on the mend," added Mr. O'Shaughnessy.

The Canadian fund will blend both strategies and use 25 stocks generally traded on the Toronto Stock Exchange, he noted.

Mr. O'Shaughnessy said that he bases his strategy on extended research of market data going back 45 years.

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