Updates to the Fidelity ClearPath Target Date Funds’ glidepath and strategic asset allocation

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

Fidelity Investments Canada recently announced that they will be making changes to the Fidelity ClearPath® Portfolios’ glidepath and strategic asset allocation in Q1 2026. Fidelity makes these updates periodically to reflect the investment team’s long-term views on Canadian investor needs, capital markets and diversification. The changes apply to both series of target date funds available on the Sun Life platform - the ClearPath Blend (Institutional Portfolios) and ClearPath Index Plus.

Fidelity’s research indicates that investors are concerned with longevity risk, since people are living longer and becoming increasingly reliant on their Defined Contribution assets to support their retirement needs and spending. As a result, Fidelity will make the following changes:

1. Increase equity exposure and decrease fixed income exposure for both early-career investors and investors in retirement.
   • Equity allocations for younger investors will increase by up to 4%, funded from reductions in Canadian and global investment grade bonds.
   • Equity allocations during the pre-retirement, de-risking phase will remain the same.
   • Increase in equity exposure by up to 6% for those in retirement.
2. For investors near and in retirement, Fidelity will increase exposure to inflation-sensitive assets through an increase in global-inflation linked bonds and the addition of commodities to the strategic asset allocation. Exposure to nominal fixed income (long-term and short-term) and Canadian real return bonds will decrease for investors near and in retirement. Commodity allocation will be through a passive exposure to the Bloomberg Commodity Forward Three-month Index.

Fidelity believes an increase in equity exposure can potentially improve the portfolios’ ability to support income in retirement which can mitigate the longevity risk investors face. Furthermore, an increase in exposure to inflation sensitive assets may improve portfolio resilience during inflationary environments.

The transition will begin in early 2026 and will take several months to complete. Fidelity will monitor market conditions and transaction costs during the implementation period.

The strategic asset allocation updates will result in changes to each portfolios’ blended benchmarks.

Sun Life GRS Investment Solutions team view

The changes are consistent with Fidelity’s normal practice of updating the ClearPath® glidepath and strategic asset allocation. The changes are in line with Fidelity’s forward-looking estimates of capital market and demographic inputs, with a focus on long-term outcomes. The investment rationale for an equity exposure increase is a result of increasing longevity risk for members. The investment team’s long-term capital markets research continues to reinforce the growing importance of inflation-sensitive instruments, such as global inflation linked bonds and commodities. Overall, these changes are likely to improve the long-term outcomes for members.