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A Royal Bank of Canada sign is seen in downtown Toronto

Mark Blinch/Reuters

BlueBay Asset Mangement, a division of Royal Bank of Canada, is closing a billion-dollar hedge fund and returning its capital to shareholders.

The decision to shut the $1.4-billion (U.S.) fund comes after its manager, Neil Phillips, who is based in London, announced his departure from the firm. The macro fund had an emerging markets focus and specialized in foreign exchange and rates.

Mr. Phillips is leaving BlueBay to start his own firm, according to Bloomberg, which will launch by next August and will focus on emerging markets. His macro fund at BlueBay gained 8 per cent in 2014 as of the end of October, beating the average 2 per cent year to date return for macro funds, according Eurekahedge.

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An RBC spokesperson wrote in an email that Mr. Phillips is leaving "having reached the decision that it is time for him to move on to the next chapter in his life and career.  After careful consideration, and in the best interest of investors, BlueBay will close the Macro Fund and return all capital to investors. We wish Neil well for the future."

The decision comes just two months after BlueBay hired Wike Groenenberg, the former head of emerging markets strategy at Citi, to take on a strategy role for the macro fund.

RBC's push to buy BlueBay, which now has $66-billion of assets under management, kick-started a wave of international expansion by the asset management arms of Canadian banks.

Since RBC struck the deal in 2010, Toronto-Dominion Bank bought Epoch Investments in the U.S., CIBC bought a stake in American Century Investments and all of Atlantic Trust in the U.S., and Bank of Montreal bought F&C Asset Management.

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