Removal of Cambridge American Equity Segregated Fund from Core Investment Platform
November 18, 2013
Plan sponsors may wish to consider whether this investment update has any implications for the investment options available within their plan. 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).
Sun Life Financial is committed to continually monitoring the investment options available to our clients. Enhancing our Core Investment platform, by adding and removing funds from time-to-time is one of the ways that we deliver on this service commitment.
Effective immediately, Sun Life Financial Group Retirement Services will no longer market the Cambridge American Equity Segregated Fund (formerly CI Value Trust Segregated Fund) as part of our Core Investment platform. Additionally, we will close this fund on March 31, 2014. Governance activities will continue for this fund until March 31, 2014.
Action required by March 31, 2014
We ask that plan sponsors who currently offer the Cambridge American Equity Segregated Fund in their plan(s) advise Sun Life Financial Group Retirement Services of a replacement fund to map the existing assets to, no later than March 31, 2014. If clients do not give Sun Life Financial direction on a replacement fund by March 31, 2014, plan members' assets in this fund will automatically be mapped to the Sun Life MFS US Equity Segregated Fund on April 25, 2014.
How does this affect plan members?
When plan sponsors replace the Cambridge American Equity Segregated Fund with another fund and map the assets, plan members with assets invested in a Non-Registered plan may experience a tax impact (capital gain or capital loss), which would appear on the applicable year's tax slip.
Rationale for removal of Cambridge American Equity Segregated Fund
Long-term performance results of this fund have been below benchmark and its peers. Cambridge Advisors took over as sub-advisor of the fund in June 2011, replacing Legg Mason Capital Management and since then, we have seen significant redemptions from the fund and a lack of interest from new plan sponsors to offer this fund to their plan members.
Background on Sun Life MFS US Equity Segregated Fund (Formerly the Sun Life MFS McLean Budden U.S. Equity fund)
The goal of the Sun Life MFS U.S. Equity fund is to outperform the S&P 500 Index on a risk-adjusted basis and to achieve a competitive ranking in relevant peer universes over full market cycles. The tenets of MFS's investment philosophy are based upon the following beliefs:
- Earnings growth combined with a valuation discipline are the most important drivers of stock price performance.
- Quality is under-appreciated by the market.
The Sun Life MFS U.S. Equity Fund will generally consist of 70 to 100 securities.
Over the past five years ending June 30, 2013, the MFS U.S. Core fund (which is the underlying strategy of the Sun Life MFS U.S. Equity Segregated Fund since April 2012) has returned 8.2% on an annualized basis, outperforming the S&P 500 Index by 0.40% and ranking first quartile in the (Morningstar) universe of U.S. equity funds.
Please contact your Sun Life Financial Group Retirement Services representative.