Call to Action for plan sponsors - Schroder Diversified Growth Segregated Fund Closure and Asset Transfer

The below update is based on information received from Schroders as of January 29, 2025.  Details may be subject to change by Schroders.

Action is required

Schroders decided to close the Diversified Growth Fund (DGF), which is available on the Sun Life platform. This is a unique fund, without an obvious (similar) replacement option. Please review the replacement options available to you in detail.

If you do nothing, Sun Life will move the money from DGF to our default replacement option (PH&N Balanced Pension Trust). This is the most similar available fund available on the core investment platform, but it may not be the appropriate replacement for your plan.  

If you wish to select a different replacement fund, please review this communication in detail, along with the available replacement options to consider. If you choose a different replacement fund, you’ll need to tell Sun Life about your decision before May 1, 2026.

Background

Schroder Investment Management North America (Schroders) announced in January 2026 that they will close the Schroder Diversified Growth pooled fund on or before June 30, 2026. Schroders made the decision due to the lack of client demand.

As a result of Schroders’ decision, Sun Life will close the Schroder Diversified Growth Segregated Fund (the discontinued fund) on June 24, 2026. We’ll continue to conduct governance activities on the discontinued fund and members may continue to invest in and contribute to the discontinued fund until its closure.

On June 24, 2026, we’ll transfer any money in – and any future contributions directed to - the discontinued fund to the replacement fund as listed below.

Both the discontinued and replacement funds have a flexible asset allocation approach with broad asset allocation ranges to produce a well diversified portfolio.

The discontinued fund (DGF), however, is unique and has some differences relative to the replacement fund and other Balanced funds:

• DGF seeks to provide an absolute return of 90-day Canadian T-bill + 4% (annualized over 5-year period), while keeping the volatility to half to two thirds of global equity volatility.
• DGF has a very broad investable universe and may invest in assets and/or strategies that typical Balanced funds don’t invest in, such as long-short strategies and derivatives.
• DGF has greater flexibility in asset allocation compared to typical Balanced funds.

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 line-up. In that case (and if we don’t receive different mapping direction from you), we’ll automatically add the replacement fund to your fund line-up on June 24, 2026.

Different replacement options to consider

Option 1

If you offer the discontinued fund in a Capital Accumulation Plan, you may consider moving your members’ assets to the Target Date Funds (TDFs) in your plan. TDFs provide broad diversification, similar to the discontinued fund. TDFs provide the additional benefit of automatic risk reduction as members get close to retirement.  

If you select this option, you need to work with your Client Relationship Executive to schedule a separate asset transfer and move the assets out of the discontinued fund before June 17, 2026.

Option 2

Within the traditional Balanced funds category, we also offer the MFS Balanced Segregated Fund (MFS Balanced Fund) on the core investment platform. You can learn more about this fund later on in this message.

If you wish to select the MFS Balanced Fund or a different replacement fund (other than Target Date Funds), you need to make this selection and inform Sun Life of your decision by May 1, 2026. 

How will this affect your members? 

On June 24, 2026, 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(s). 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 May 18, 2026. Here is a copy 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 the transfer automatically takes place on June 24, 2026.

Sun Life will provide the applicable tax slip(s) in early 2027. 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.

Default Replacement Fund

The PH&N Balanced Pension Trust aims to provide long-term capital growth and income by investing primarily in a well-diversified, balanced portfolio of Canadian and foreign common stocks, Canadian and foreign bonds and Canadian money market securities. The fund also holds small allocations to direct real estate and direct infrastructure. The asset mix ranges are: 0-10% in cash, 25-55% in fixed income (High yield 0-10%) and 45-75% in equities (10-30% Canadian, 26-46% Global and Emerging market 0-14%).

PH&N’s Asset Mix Committee is responsible for the fund’s asset mix. The Committee consists of Kristian Sawkins (Head of fixed income), Stu Kedwell (Chief Investment Officer), Hanif Mamdani (Head of Alternatives), Sarah Riopelle (Head of Portfolio Solutions) and Scott Lysakowski (Head of Canadian equity). 

Alternate Replacement Fund – MFS Balanced Fund

The MFS Balanced Fund seeks to provide a superior rate of return through both income and capital appreciation by investing in a diversified portfolio of equity and fixed income assets. The asset mix ranges are: Equities 45-75% (Canadian: 15-45%, Foreign: 15-45%), fixed income 20-50% and cash 0-20%.

MFS’s Asset Mix Committee is responsible for the fund’s asset mix. The Committee consists of three portfolio managers with over 30 years of industry experience: Soami Kohly, Jeffrey Morrison and Robert Spector.

The investment management fees for this fund will also be the same, or lower, than those for the discontinued fund.

Performance comparisons – 5 years ending December 31, 2025 (annualized)

Note: The benchmarks for the above funds are as follows:

• Schroder Diversified Growth: 90-day Canadian T-bill + 4%
• PH&N Balanced Pension Trust: 1% FTSE Canada 30-Day T-Bill Index, 36% FTSE Canada Universe Bond Index, 20% S&P/TSX Capped Composite Index, 36% MSCI World (Net) Index, 4% MSCI Emerging Markets (Net) Index, 3% Canada CPI 1 month lag +400bps
• MFS Balanced Fund: 5% FTSE Canada 91-Day T-Bill Index, 35% FTSE Canada Universe Bond Index, 30% S&P/TSX Capped Composite Index, 30% MSCI ACWI (Net)

You can find more information about the PH&N Balanced Pension Trust or MFS Balanced Funds by accessing the Morningstar section of the plan sponsor web site.