Fiera Capital revised investment policies for UBS funds

August 19, 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).

As communicated in January 2013, Fiera Capital Corporation (Fiera) purchased the Canadian-based pooled funds of UBS Global Asset Management. As a result of these changes, the investment policies have been revised for the Fiera Cash in Action Segregated Fund and the Fiera Canadian Equity Small Cap Core Segregated Fund.

Fiera Cash in Action Segregated Fund
Following Fiera's purchase of UBS's Canadian-based pooled funds in Q1, 2013, the name of the UBS (Canada) Cash in Action Fund was changed to Fiera Cash in Action Fund.

New Investment Objectives: To seek to achieve the highest possible income consistent with the low risk profile and the outlined constraints.
The fund's SIP was revised to include investment in pooled funds and remove investment constraints on commercial paper. The fund invests in Government of Canada treasury bills, notes, debentures and any obligations unconditionally guaranteed by the federal, provincial and municipal governments of Canada. Bankers acceptances, certificates of deposits and other instruments issued by a Canadian or foreign bank may also be held in the portfolio. Average term of the fund will range from 15 to 60 days.

Fiera Canadian Equity Small Cap Core Segregated Fund
Following Fiera's purchase of UBS's Canadian-based pooled funds in Q1, 2013, the name of the UBS (Canada) Small Capitalization Fund was changed to Fiera Canadian Equity Small Cap Core Fund.

New Investment Objectives: To provide total long term returns mainly through capital appreciation.
The table below outlines the key changes in investment policies between UBS (most recently sub-advised by CIBC Asset Management) and Fiera small cap strategies.

Summary of Small Cap Fund Investment Policy changes
Previously under UBS Currently under Fiera
Market Capitalization
May invest in stocks with market cap of $100 million to $1.8 billion.
Market Capitalization
May invest in stocks with market cap of $150 million to $2 billion.
Money market and cash authorized investments
Minimum rating of R-1 (mid) by DBRS at time of purchase.

Money market and cash authorized investments

  • May invest in: cash, demand deposits, t-bills, short-term notes, bonds, banker's acceptances and government paper, term deposits, GIC's or other financial instruments issued by chartered banks, insurance companies, trust companies or savings banks, commercial paper, strip coupons and strip bonds, floating rate securities (adjusted minimum twice/year).
  • Minimum rating of R-1 (low) by DBRS.
  • Max 2% per issuer, excluding Canadian government issuers and overnight term deposits.

 

Equity authorized investments

  • May invest in preferred shares, private placements and securities convertible into common shares.
  • Minimum 60 stocks.
  • Maximum 5% market value in a single investment.
  • Maximum 15% in rights, warrants, special warrants, installment receipts, private placements and securities convertible into common shares.

Equity authorized investments

  • May invest in REITs (certain restrictions apply).
  • Minimum 40 stocks.
  • Must invest in 7/10 sectors in the benchmark.
  • Maximum 10% in index participation units.
Derivatives Authorized Investments
May invest in currency and debt futures contracts, forward contracts, swaps, options, warrants and repurchase agreements.
Derivatives Authorized Investments
The fund may invest in, or enter into derivative transactions for which underlying interest is based on, securities of pooled investment vehicles such as mutual funds or pooled funds (open or closed-end). Maximum 10% allocation.



UBS Fiera
 
Securities Lending
UBS did not explicitly include language on securities lending. SLF has document evidence that UBS had a securities lending in place.

Securities Lending

  • The fund shall not borrow or use the assets of the fund as a loan guarantee.
  • The fund may originate an unexpected short-term overdraft when available cash is insufficient to cover a purchase or fund redemption.
  • Margin purchases and short sales are prohibited.
  • The fund may conclude written securities lending with the fund's securities custodian. Collateral must be equal to minimum 102% of the market value of the loaned securities.

As previously communicated, these funds are no longer being marketed to new plan sponsors. However, plan sponsors who currently offer these funds may continue to do so. Sun Life Financial will continue to audit and monitor these funds in accordance with its normal practices.

Fiera's IPS outlines the investment and performance objectives for the investment funds managed by Fiera. A copy of the revised IPS is available on the Sun Life Financial Plan Sponsor Services website at
www.sunlife.ca/sponsor.

Questions?
Please contact your Sun Life Financial Group Retirement Services representative.