Life’s brighter under the sun

AN EVOLUTION OF OUR INVESTMENT PLATFORMSKey changes to the Sun Life Financial Core investment platform

At Sun Life, our clients – plan sponsors and members – are at the heart of everything we do. We are working every day to make saving for retirement an easier, faster and more personal experience. Like you, we want to ensure plan members make the most of their workplace savings plan for a brighter future.

One of the ways we are doing that is by offering a top-notch list of expertly designed, managed and governed Core investment platform funds to choose from. After our most recent in-depth review of this list, we have some important changes to how we are approaching our Core investment platform that we want to share.

We practice what we PREACHWe always carefully monitor our Core investment platform, but every three to five years we do a thorough review, just like what we recommend plan sponsors perform for their own lineups. We look at how the funds are performing, activity with the investment management firms and overall economic and industry trends, and consider how we can improve the platform. We take a step back and study all the fund categories as a whole. We want to make sure we have enough diversity but also streamline where we can, reducing the number of similar funds.

We listened to our RESEARCHThanks to some great in-depth industry-wide research we’ve done on thousands of plan sponsors and members, we have some insight into which funds sponsors are choosing and members are actually using, when they invest in these funds, how much of their money they’re putting in and more. For example, target date funds continue to grow in popularity due to their ease of use and selection, while members are moving away from balanced funds, in general. That’s why we added the Fidelity ClearPath™ Portfolio target date funds to our Core investment platform last year as the first step in this review, and are reducing the number of balanced funds offered. We want to make sure we’re responding to the data we collect to make an even more relevant and evolved core investment selection platform to allow you to build lineups that meet the needs of your members.

According to our 2016 Designed for Savings report, TARGET DATE FUNDS represented 7% of CAP assets at Sun Life Financial five years ago, whereas they represented 24% at the end of 2016.

7%2010

24%2016

We considered the ECONOMIC ENVIRONMENTAt Sun Life, we stay ahead of the market so we can help plan members get the best outcomes possible. But that doesn’t mean we don’t pay attention to what’s going on around us.

Our team of investment specialists constantly monitors the economic climate to see which fund categories are better positioned to help members achieve their objectives, as well as the industry environment to see which categories are growing and which are in decline. For example, the specialty fixed income and global equity categories have been growing in popularity. This has been driven in part by the need to allow investment managers more flexibility to find return in what is widely considered to be a low return environment for investing.

There’s also been increasing interest in socially responsible and tax-efficient options such as registered-only funds, so this was reflected in the choices we made in designing our most recent core fund offering.

Today, we have about

15% of our

fixed income

assets in funds

that invest

partially or

completely outside of

Canada. In 2013, we had

less than 1%.

15%2017

SPOTLIGHT on a categorySpecialty fixed income: Traditional fixed income funds typically invest in bonds only issued by Canadian governments and corporations. In contrast, specialty fixed income funds are generally allowed to invest outside of Canada to help achieve additional return while controlling risk.

We looked for more DIVERSITYWe always tell plan members that diversification is critical when it comes to investing. The same goes for us when we’re looking at what investments and investment managers we include in our core offering. We want to make sure we’re providing choice to our clients, with lots of different manager styles and fund types, including both Sun Life-affiliated fund managers and independent ones. We removed some funds that were similar to each other, and added in some more unique options. This is in an effort to give you even more choice, while at the same time make your decision-making easier.

SPOTLIGHT on our new investment partner, T. Rowe PriceFounded in 1937, Baltimore-based T. Rowe Price Group, Inc. (troweprice.com) is a global investment management organization with $810.8 billion in assets under management as of Dec. 31, 2016. They have offices in 16 countries, with clients in 45 countries all over the world. T. Rowe Price’s disciplined, risk-aware investment approach focuses on diversification, style consistency and fundamental research.

Interestingly, it was founded by Thomas Rowe Price Jr., who is best known for developing the growth stock philosophy of investing.

What’s NEXT?We suggest that our plan sponsors review their investment lineup every three to five years using a consultant, advisor or Sun Life Investment Solutions Executive to see if it continues to meet the needs of their plan members. If plan sponsors would like the involvement of an Investment Solutions Executive to help select funds and craft and monitor their individual fund lineups, they can contact their Sun Life Financial Group Retirement Services representative. Plus, our clients can also count on SunINsight, our governance program, to support the sound management of their group savings plan.

Our Core investment platform is an important part of our offering to plan sponsors. These enhancements represent our commitment to offering diverse investment options complemented by an industry-leading governance program.

DID YOU KNOW?Sun Life can benchmark your fund lineup against the industry using our Designed For Savings reports and tools to see how your lineup compares against those of their peers. This can help plan sponsors evaluate whether changes are needed.

What’s CHANGING?Plan sponsors can add any of the new funds below to their fund lineups effective May 15, 2017.

FUND CATEGORIES FUNDS ADDED

FIXED INCOME CC&L Group Bond

SPECIALTY FIXED INCOME

MFS Canadian Core Plus Fixed Income

MFS Global Fixed Income

PH&N Core Plus Bond

U.S. EQUITY BlackRock U.S. Equity Index Hedged (Registered)

Sun Life MFS U.S. Growth Hedged

Sun Life MFS U.S. Value Hedged

TDAM Low Volatility U.S. Equity (Registered)

TDAM U.S. Shareholder Yield

T. Rowe Price U.S. Large Cap Core Growth Equity

T. Rowe Price U.S. Large Cap Core Growth Equity (Registered)

INTERNATIONAL EQUITY

Hexavest Europac

T. Rowe Price International Concentrated Equity

GLOBAL EQUITY BlackRock ACWI Alpha Tilts (Registered)

PH&N Fossil Fuel Free Global Equity

TDAM Low Volatility Global Equity

T. Rowe Price Global Growth Equity

Life’s brighter under the sun

We will also de-list some funds from our Core investment platform marketed list. However, we will continue performing governance activity on these funds indefinitely and assets will not move to replacement funds. In general, decisions to remove funds take into consideration a variety of factors, including overlap with other options within the platforms, controlling capacity within popular options based on investment managers’ requests, investment concerns and client demand.

FUND CATEGORIES FUNDS REMOVED FROM MARKETED LIST

BALANCED MFS Balanced

PH&N Balanced

Sun Life BlackRock Canadian Balanced

CANADIAN EQUITY MFS Canadian Equity Core

PH&N Canadian Equity

PH&N Canadian Equity Plus

Trimark Canadian

GLOBAL EQUITY Sun Life MFS Global Value

Effective immediately, the following funds will be removed from the marketed list of our Core investment platform. Sun Life will stop providing governance on these funds in early 2018. We will directly communicate with any plans sponsors who have these funds included in their lineups to help them assess their best course of action.

FUND CATEGORIES FUNDS REMOVED FROM PLATFORM

INTERNATIONAL EQUITY Sprucegrove International

GLOBAL EQUITY Sprucegrove Global

SPECIALTY GLOBAL EQUITY Sun Life Sentry Global Mid Cap

Sun Life Sentry Global Infrastructure

In addition to these enhancements to our Core investment platform for capital accumulation plans (CAP), we have also made enhancements to our DB investment platform. This includes the addition of BlackRock Active Long Bond Plus fund and the removal of Invesco Balanced Risk Allocation fund. We will continue to develop our investment platforms to continue to meet the needs of both CAP and DB plan sponsors.

If you have any questions or would like to revisit your fund lineup, please contact your Sun Life Financial Group Retirement Services representative.

Group Retirement Services are provided by Sun Life Assurance Company of Canada, a member of the Sun Life Financial group of companies. 05-17 sc-an