Updates to the Sun Life Granite Target Date and Multi-Risk Target Date 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 funds listed below, which are established as segregated funds in accordance with the Insurance Companies Act (Canada).

In November 2024, SLGI Asset Management (SLGI) announced changes to two of the funds held within the Granite Target Date and Granite Multi-Risk Target Date series of segregated funds (Granite TDFs). SLGI also provided an update on enhancements initially announced in 2023 as part of their annual strategic review.

Two Fund Changes:

1) In October 2024, SLGI made a change to the global mid-cap equity fund in Granite TDFs. Specifically, SLGI replaced the Sun Life Schroder Global Mid Cap fund with an equal split between the MFS Global Small-Mid Cap Equity Value and Acadian Global Small Cap Equity Funds.

The MFS fund is managed by a global research team with expertise in global and small cap investing. SLGI’s view is that the team has the breadth to cover global small cap stocks well, and to uncover undervalued opportunities.

The Acadian fund is managed with a quantitative bottom-up approach and is benchmarked to the MSCI ACWI Small Cap index. SLGI believes that Acadian’s quantitative process has the potential to uncover value-add opportunities in less researched/covered small cap stocks.

SLGI believe the blend of these two new mandates will offer asset class diversification, style diversification and the potential for enhanced risk-adjusted returns.

2) In November 2024, SLGI replaced the Beutel Goodman Canadian Equity Fund with PH&N Canadian Equity Value Fund. 

The PH&N fund is managed with a Value approach and is based on fundamental research. They also consider quantitative and technical factors. The fund’s benchmark is the S&P/TSX Capped Composite Index.

SLGI selected PH&N because of their deep research capabilities and strong track record.

They believe the PH&N fund will offer style diversification and the potential for enhanced risk-adjusted returns. Lastly, SLGI cited that the PH&N fund would be a stronger complement within the overall Granite TDFs portfolios.

Updates to Enhancements announced in 2023:

Last year, we communicated SLGI’s 2023 annual enhancements, and provided an update on those enhancements earlier this year.  Below are the latest updates to these previously communicated enhancements:

Glidepath

In 2023, SLGI announced that the Granite TDFs would have increased equity across all funds. SLGI implemented the glidepath changes in five stages, beginning in the fourth quarter of 2023 and ending in the fourth quarter of 2024. SLGI completed the fifth and final increase on November 1, 2024. The traditional Granite Target Date glidepath’s starting equity weight increased from 91.5% to 93.0% and the ending equity weight increased from 35% to 41.5%.

As for the Granite Multi-Risk target date funds, all glidepaths also saw increased equity levels, as follows:

• the Conservative funds starting equity weight increased from 89% to 91.5% and the ending weight remained at 35%; and
• the Moderate funds continued to mirror the traditional Granite TDFs glidepath (starting equity weight 41.5%, ending equity weight 93.0%); and
• the Aggressive funds starting equity weight remained at 96% and the ending equity weight increased from 35% to 48%.

Asset mix

SLGI previously announced that they would introduce three new asset classes in Granite TDFs: direct infrastructure, direct real estate, and liquid alternatives.  Here are the updates

• SLGI previously announced that its initial allocation to direct infrastructure would be made through the InfraRed Capital Partners Energy Transition Fund in 2025.
• SLGI have initiated the search for a direct real estate manager. The team will make their manager selection by the end of 2024 and expect to add it to Granite TDFs in early 2025.

SLGI selected AlphaSimplex Managed Futures as the trend-following liquid alternatives mandate. They selected the mandate for its: 1) Strong research platform, portfolio management and risk management; 2) Pioneering in “Crisis-Alpha¹” investing; 3) Emphasis on pure “trend” investing; and 4) Strong track record of peer-relative returns.

AlphaSimplex is a systematic alternatives manager, founded in 1999, focused on delivering quantitative investment strategies that are attuned to changing market dynamics.

This is an absolute return fund which seeks to provide long-term capital appreciation. The Fund uses a trend-following approach, which means the manager aims to take advantage of momentum in a range of liquid futures and forward contracts across global equity, bond, currency, and commodity markets. The Fund seeks to provide a differentiated source and pattern of returns in comparison to traditional asset classes like global equities and fixed income.

SLGI believe the new fund will offer strategy diversification, enhanced risk-adjusted return, downside protection and potential for inflation protection. The fund will have allocations of up to 3.5% in Granite TDF with funds closer to maturity having the largest allocations.

Fund changes

In 2023, SLGI announced their replacement of the Sun Life MFS International Value fund with the Acadian International Equity fund. They made this change over five increments.  The final increase happened on November 1, 2024.

Sun Life GRS Investment Solutions View

We are generally comfortable with SLGI’s enhancements and rationale. We have requested some follow-up information to confirm our understanding.  We will be closely monitoring their implementation, and we will provide further updates as necessary.

There is no impact to fees charged to members due to these changes.

Do you have to take any action?

This update is for your information only. You don’t need to take any action.

Questions?

Please contact your Sun Life Group Retirement Services representative.