Sun Life Global Investments (“SLGI”) is making enhancements to our Sun Life Granite Target Date and our Sun Life Granite Target Risk series of Funds (the “Funds”). These enhancements take effect in the second quarter of 2020.
Our portfolio management team reviews the long-term strategic target allocations for the Funds once a year. This allows us to update our investment opportunity set, risk and return assumptions and constraints within the context of an evolving market environment. In this way, we seek to optimize the Funds’ risk-adjusted returns, while remaining consistent with our overall objective and philosophy.
Financial markets continue to evolve. We remain vigilant. We regularly assess risks and opportunities in our portfolio construction. In our annual review, we conduct extensive research to find ways to enhance our Granite suite of products. We do this to provide long-term value for investors.
Canadian Fixed Income
We are reallocating some of our Canadian core bond exposure into U.S. core bonds.
We are making this change to enhance yield and expected return potential, as well as overall portfolio diversification.
Global Fixed Income
We are changing our exposure to Global Fixed Income within the Fund from Templeton Global Bond Fund to the Sun Life Opportunistic Fixed Income Private Pool, sub-advised by Wellington Management Canada ULC, a subsidiary of Wellington Investment Advisors Holdings LLP (“Wellington”). We are making this change to enhance return consistency relative to the broad global bond benchmark.
We are modestly reducing our exposure to large-cap Canadian core equities from 33% to 30%. In turn, the non-Canadian equity allocations will increase: U.S. from 33% to 35%; and EAFE plus emerging markets from 33% to 35%.
We are making this change to enhance expected risk-adjusted returns and diversification.
We are changing our manager allocation within international equities as shown below:
We have made the above changes to enhance manager diversification across the portfolio building blocks.
For Sun Life Granite Target Risk Funds only - Canadian Fixed Income
In the Sun Life Granite Target Risk Funds, we are adding a bottom up, core plus mandate, broadening our opportunity set in Canadian bonds. This mandate is sub-advised by Sun Life Capital Management (Canada) Inc.
We are making the above change to enhance inflation and credit awareness; holding inflation-linked bonds opportunistically, can help preserve capital at different points in the economic cycle. Broader credit exposure may help enhance yield and diversification.
This enhancement is not applicable to Sun Life Granite Target Date series of Funds because they already offer broad credit exposure through the Sun Life Private Fixed Income Plus and Canadian Commercial Mortgage Funds (sub-advised by Sun Life Capital Management (Canada) Inc.).
The Funds’ respective benchmarks will be modified effective April 1, 2020 to reflect the above mentioned enhancements.
About the Sun Life Opportunistic Fixed Income Private Pool (sub-advised by Wellington)
The Fund’s investment objective is to seek long-term capital appreciation and income by investing primarily in a diversified portfolio of global fixed income securities. The fund strives to achieve a return of 5-6% per annum over the course of a full business cycle, typically 3 to 5 years (before the deduction of management fees and expenses)1. Wellington is one of the largest fund managers in the world with over $US 1 trillion in AUM. It has been managing investments since 1928.
*All investment solutions are offered as segregated funds for group retirement plans exclusively by Sun Life Assurance Company of Canada, through Sun Life Group Retirement Services, a member of the Sun Life group of companies.
1 Actual fund results will be lower after the deduction of fees and expenses. No assurance or gurantee is made that any target return or volatility target can or will be achieved.