Sionna Canadian Small Cap Equity Segregated Fund closure and asset transfer
January 14, 2020
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).
Sionna Investment Managers Inc. (“Sionna”) announced on December 3, 2019, that the lead portfolio manager of the Sionna Canadian Small Cap fund, Teresa Lee, would leave the firm to pursue family and other interests. Ms. Lee’s departure was effective December 31, 2019. Sionna decided to consolidate products following Ms. Lee’s departure. Therefore, Sionna has closed the Sionna Canadian Small Cap fund. The decision was made in order to ensure their investment team can focus on producing strong performance for Sionna’s other investment strategies.
As a result of Sionna’s decision, Sun Life will have to close the Sionna Canadian Small Cap Segregated Fund (“discontinued fund”) on May 15, 2020.
Action may be required
Sun Life will transfer the money in the discontinued fund to the Fiera Canadian Equity Small Cap Core Segregated Fund (“replacement fund”) on May 15, 2020. The transfer will happen unless we explicitly receive different instructions from plan sponsors currently offering the discontinued fund (see next paragraph). The replacement fund is the only other small cap Canadian equity option available to new Clients on our core investment platform.
You may want to transfer your plan’s assets into a different fund already available within your lineup. In that case, you will need to make this selection and inform Sun Life of your decision by April 17, 2020. If you are satisfied with the replacement fund suggested, you don’t have to take any action at this time.
Your plan may not currently offer the replacement fund. In that situation, Sun Life will automatically add the replacement fund to your lineup before the asset transfer occurs.
How will this affect your members?
On May 15, 2020, we will automatically transfer to the replacement fund any assets remaining in – and any future contributions directed to – the discontinued fund. When the changes are implemented, plan members will see a sale of the discontinued fund and the purchase of the replacement fund reflected in their accounts. This change will not result in a taxable capital gain or loss for plan members if their money is invested in a registered product. Plan members with money in a non-registered product will likely experience a capital gain or loss when the money is transferred to the replacement fund. The members must report capital gains in the year the transfer occurs. Plan members can move their money at any time before the transfer automatically takes place on May 15, 2020.
We will provide communications to your members that include details about the discontinued fund’s closure, the replacement fund and what will happen to their money on the date of closure. If you wish to have us provide a custom message to your members, please contact your Group Retirement Services representative by April 17, 2020.
About the replacement fund
The Fiera Canadian Equity Small Cap Core Segregated Fund seeks to provide a total annualized return higher than the S&P/TSX Small Cap Index (“benchmark”) primarily through capital appreciation. The Fund invests in Canadian small cap companies with a market capitalization of $150 million to $2 billion. The investment team employs bottom-up, fundamental analysis to select companies with strong balance sheets and earnings growth. The Fund holds a minimum of 40 securities. Michael Chan is the lead Portfolio Manager. He has 25 years of industry experience and more than 10 years tenure with the firm. As of September 30, 2019, the Fund outperformed its benchmark by 3.1% on a 5-year annualized basis.
Fiera Capital is the manager of the Fund. The firm’s headquarters are located in Montreal. It has offices across Canada, the US, Europe and Asia. Fiera managed C$ 164.7 billion as of September 2019.
Please contact your Sun Life Group Retirement Services representative.