Portfolio Manager Change to Sun Life Sentry Value
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 fund listed below, which is established as a segregated fund in accordance with the Insurance Companies Act (Canada).
In September 2019, CI Investments ("CI") terminated Michael Simpson, the lead portfolio manager for the SL Sentry Value strategy. Sun Life Global Investments ("SLGI") is the investment manager for this strategy and Sentry Investments ("Sentry") is the sub-advisor. CI acquired Sentry in 2017 and since then is in charge of reviewing the investment teams and strategies at the firm as part of its long-term strategic planning. Aubrey Hearn, Vice-President and new Head of Equities at Sentry, assumes portfolio management responsibilities, along with Bryan Brown and Jack Hall.
We had previously identified Mr. Simpson as a key person for the Sentry Value strategy. He was the sole portfolio manager and decision-maker. Moreover, he was primarily supported by analysts who had little experience and tenure on the strategy. CI noted that Mr. Simpson's departure related to an inability to work collaboratively with the rest of the Sentry investment team.
Aubrey Hearn has been at Sentry since 2005 and most recently managed some of the firm's U.S.-focused income strategies. He was promoted to Head of Equities in September, in part due to the strong performance of these strategies. Bryan Brown joined Sentry in 2013 and brings 15 years of investment experience. He has co-managed a North American all-cap income fund since 2018. Mr. Hearn will have primary oversight responsibility for the strategy, while Mr. Brown will manage the day-to-day responsibilities.
We expect that the new team will implement significant changes to the portfolio. They have more experience with U.S. stock research and portfolio management. The U.S. equity portion of the strategy will increase over time. Foreign equities were approximately 10% of the portfolio under Michael Simpson. They will move much closer to the maximum permitted (49%) under Hearn and Brown. We have some concern with the level of portfolio management experience in Canadian equities given that this is still a Canadian-focused mandate.
With the changes to the team and the likely significant changes to the strategy, Sun Life Group Retirement Services has lost long-term confidence in Sentry's capabilities in Canadian Equities. As a result, we are designating the fund as Suggested For Removal. Sun Life governance activities on the strategy will continue for the time being but are expected to end at some future date. SLGI has placed SL Sentry Value on Watch.
Please contact your Sun Life Group Retirement Services representative.