We are delighted to announce the addition of the new Sun Life Daily Accumulation Fund ("the Fund") to our core investment platform. The Fund credits interest on a daily basis and provides the withdrawal flexibility that is expected of a money market fund, while generating a stable rate of return. As such, the Fund is a viable alternative to money market funds.
This fund will be available starting in Q3 2018.
Features of the Fund
The Fund has the following features:
- Eligibility for Assuris coverage
- No restrictions/penalties on withdrawal
- No explicit fees (fund related expenses are embedded within the interest credited)
- Stable return that will never be negative
Fund Comparison
Daily Accumulation Fund |
Money Market Fund |
Guaranteed Fund |
|
|---|---|---|---|
| Assuris or CDIC Coverage | Yes | No | Yes |
| Term of Credited Interest | Daily | Daily | 1 to 5 years |
| Short Term Trading Penalty | None | None | None |
| Market Value Adjustments | No | No | Yes |
Fees
Similar to the current guaranteed funds, there are no fees applicable for the Fund. Expenses and client servicing costs are fully reflected within the interest rate credited by the Fund (see below).
Interest Credited
The daily credited interest will be calculated as a base rate plus an enhancement, similar to our guaranteed funds today (but the base rate and enhancement for the Fund will be distinct from that of guaranteed funds). We believe the return of the Fund is likely to be competitive and is expected to have periods where it will outperform money market fund returns net of all fees going forward.
The base rate for the Fund is determined based on a number of factors, including but not limited to: the return of assets used to support the Fund, operational expenses to support the Fund, and return competitiveness relative to money market funds. Generally, movement in the base rate will be directionally consistent with that of the 91 Day Treasury Bill.
Risks
The Fund is classified as "low risk" for investors. As a general account fund (similar to current guaranteed funds), the Fund is backed by the financial strength of Sun Life – Sun Life Assurance Company of Canada financial strength rating of AA- (or equivalent) from most rating agencies. Even in the unlikely event that Sun Life defaults on its general account obligations, the Fund is eligible for coverage under Assuris for up to $100,000 per member.
