Updates for the Sun Life Multi-Strategy Bond and Sun Life Multi-Strategy Core Plus Bond Segregated Funds

Plan sponsors may wish to consider whether this investment news has any implications for the investment options available within their plans. Sun Life Assurance Company of Canada purchases units of the fund listed below, which is established as a segregated fund in accordance with the Insurance Companies Act (Canada).

Plan sponsors don’t need to take any immediate action as a result of this update.

We will send your members a message via message centre in early October, 2025.

The Sun Life Global Investments (SLGI) Multi-Asset Solutions Team recently announced changes to the Sun Life Multi-Strategy Bond Segregated Fund (Bond Fund).

SLGI builds the funds by choosing underlying sub-advisors. They manage the overall strategic asset allocation and can make tactical allocations to mitigate risk and take advantage of market opportunities as they deem appropriate.

SLGI will make changes to the Bond Fund that they believe will strengthen their value proposition, improve risk-adjusted returns, and better meet the evolving needs of plan sponsors and members.

The changes include:

1. Reduce passive allocation: SLGI are significantly decreasing the allocation to the passive bond component (SL BlackRock Canadian Universe Bond Fund) from 45% to 20%. This change allows for more exposure to actively managed fixed income strategies.
2. Significant increase to "Plus” sectors, primarily through  U.S. investment grade fixed income: SLGI are adding allocations to two funds to further diversify and potentially enhance returns.
   
   • 10% to Sun Life Core Advantage Credit: This fund invests primarily in a diversified portfolio of North American investment grade fixed income securities. Up to 50% of the fund can be invested in U.S. investment grade fixed income (hedged to the Canadian dollar), but the current allocation is only 10%. There is also an approximate 10% allocation to private fixed income to enhance yield and diversification.
   • 14.5% to Sun Life U.S. Core Fixed Income: This fund invests primarily in U.S. investment grade fixed income securities (hedged to the Canadian dollar).
     These strategies provide enhanced yield (primarily due to their credit allocations) and access to a private markets liquidity premium. Overall, the Bond Fund is expected to have an allocation of 79.5% to 84.5% to Core (investment grade Canadian) fixed income and 15.5% to 20.5% to Plus (foreign and private) fixed income.
3. A more equal allocation between the two current active Canadian fixed income managers: A 55% allocation to active investment managers, split between a 25% allocation to PH&N Bond and a 30% allocation to CC&L Group Bond. The increased allocation to CC&L reflects SLGI’s high conviction in CC&L’s ability to capture market opportunities. SLGI are maintaining an allocation to PH&N due to their complementary role and consistent value added.
4. Removal of Global Bonds: SLGI will remove the allocation to the Sun Life Wellington Opportunistic Fixed Income Private Pool to better align with SLGI’s core investment grade focus.

The strategic allocation changes to the Bond Fund will be as follows: 

SLGI also announced that the Sun Life Multi-Strategy Core Plus Segregated Fund (Core Plus Fund) would be closing and merging into the Bond Fund. You can find details of this fund closure here.

The strategic allocation changes to the Core Plus Fund will be as follows: 

GRS Investment Solutions team view

We are comfortable with the asset allocation changes to the funds. We view the reduction in passive fixed income positively, as Canadian core and core plus fixed income have seen most managers outperform their benchmarks over time. We also view the increased ‘Plus’ sector allocations positively due to their potential for diversification benefits. US investment grade fixed income provides additional issuer and industry diversification in comparison to the relatively concentrated Canadian investment grade market.

The two new mandates (US Core Fixed Income, SL Core Advantage Credit), both managed by SLC Management, currently have relatively small asset bases (slightly over $1.1B total). However, they have demonstrated solid value added relative to their benchmarks over the 5+ years since their inception. SLC Management has a strong firm culture and depth of experience in fixed income.

Due to the significance of the changes to the Sun Life Multi-Strategy Bond Fund, we are placing it under Additional Monitoring (least severe category) on the GRS Investment Solutions Watch List. We will monitor the fund through the transition and provide further updates as needed.