Action may be required - Sun Life Opportunistic Fixed Income Segregated Fund Closure and Asset Transfer

The replacement fund invests in the same asset class of global fixed income. Both funds are benchmarked to the Bloomberg Barclays Global Aggregate Bond Index. However, the discontinued fund’s benchmark is hedged to Canadian dollars, while the replacement fund’s benchmark is not hedged.  The investment management fees for the replacement fund will be the same, or lower, than those for the discontinued fund.

Your plan(s) may not currently offer the replacement fund in the lineup. In that case, we’ll automatically add the replacement fund to the lineup before the asset transfer occurs on August 7, 2025.

The transfer will happen as described, above unless we receive different instructions from you in writing.

You may want to transfer the money in the discontinued fund into either:

• Another fund currently available in your line-up, or
• An alternative fund on the Core investment platform which better suits your plan’s needs (see example below)

A different replacement option to consider

Within Global (Specialty) fixed income, we also offer the PIMCO Canada Monthly Income Fund Segregated Fund on the core investment platform.

If you wish to select the PIMCO Canada Monthly Income Canada Segregated Fund, or a different replacement fund and/or asset transfer date, you need to make this selection and inform Sun Life of your decision by June 20, 2025.

You don’t have to take any action if you are satisfied with the replacement fund.

How will this affect your members?

On August 7, 2025, we’ll automatically transfer any money remaining in – and any future contributions directed to – the discontinued fund to the replacement fund. When the change happens, your members will see a sale of the discontinued fund and the purchase of the replacement fund in their account.  These transactions may result in a taxable capital gain or loss for your members invested in a Non-Registered plan.

We’ll send an email to members who currently hold the discontinued fund on or around July 7, 2025. Here are copies of the MFS and PIMCO versions for your reference.

Plan members can also move their money to any other funds offered in the plan. They can do so at any time before or after the transfer automatically takes place on August 7, 2025.

Sun Life will provide the applicable tax slip(s) in early 2026. The tax slip(s) will reflect all income from your members’ Non-Registered investments.

For more information on how capital gains can occur in segregated funds within Non-Registered plans, please read the article here. Members can find their ACB on Plan Member Services website mysunlife.ca and selecting Check on Account > Balances.

Replacement Fund

The MFS Global Fixed Income Segregated Fund is a core global fixed income portfolio that seeks a moderate total rate of return, through income and capital gains. The fund invests in fixed income debt instruments including but not limited to: corporate; government and mortgage-backed securities; structured debt including asset backed and commercial mortgage-backed securities; emerging markets debt; high yield debt; bank loans, loan participations and assignments.

In general, the fund’s duration will range between +/- 2 years relative to the Barclays Capital Global Aggregate Bond Index. Non-U.S. currency exposure will be within +/- 10% of the benchmark’s currency weightings, under normal market conditions. High yield exposure is limited to 20% of the fund.

Robert Spector and Pilar Gomez-Bravo are the lead Portfolio Managers of the fund.

Alternate Replacement Fund – PIMCO Canada Monthly Income

This may be an attractive option for income-oriented investors who seek a bond investment offering the potential for a relatively high and consistent stream of income with an emphasis on high-quality fixed income securities. The fund is actively managed in an effort to maximize current income while maintaining a relatively low risk profile, with a secondary goal of capital appreciation.

Alfred Murata is the lead Portfolio Manager, and is supported by co-PMs, Dan Ivascyn and Joshua Anderson. The fund uses a global multi-sector, benchmark agnostic approach. The fund’s duration can range between 0 - 8 years. It has a maximum allocation to corporate high yield of 50%. The Fund’s benchmark is the Barclays U.S. Aggregate Bond Index (CAD hedged).

Performance comparisons – 5 years ending December 31, 2024 (annualized):

• Closing Fund: 0.63% vs. 0.01% benchmark;
• Replacement Fund (MFS Global Fixed Income): 0.85% vs 0.09% benchmark;
• Alternate Replacement Fund (PIMCO Canada Monthly Income): 3.02% vs. -0.84% benchmark

Please note that the fees for the PIMCO fund are slightly higher than the discontinued fund, which is why our default replacement fund is as indicated above.

You can obtain more information about the MFS Global Fixed Income Segregated Fund or the PIMCO Monthly Income (Canada) Segregated Fund by accessing the Morningstar section of the plan sponsor web site.

Questions?

Please contact your Sun Life Group Retirement Services representative*.

*In Quebec, registered as a Group annuity plans advisor.