2020

March 09, 2020

Update on BlackRock Active Canadian Equity

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 December 2019, BlackRock Inc. announced that Mark Wiseman would be leaving the firm after violating the company’s relationships at work policy. Mr. Wiseman was the global head of active equities. He joined BlackRock in 2016. Mr. Wiseman was one of the candidates under consideration to succeed Larry Fink, Chief Executive Officer.

In the meantime, the leaders of the various active equity strategies will report to Rob Kapito, President. BlackRock will reassess the leadership structure.

GRS Investment Solutions comments

This announcement may negatively affect the BlackRock Active Canadian Equity Fund (the “Fund”). BlackRock’s San Francisco-based Scientific Active Equity (“SAE”) team manages the Fund. The SAE team had used the expertise of Canadian-based product strategist and former lead portfolio manager, Vincent Roy. Mr. Roy departed in June 2018. Since then, Mr. Wiseman played a meaningful role on the strategy as a source of expertise on the Canadian markets. We have concerns about the lack of Canadian expertise on the current team.

We had placed the Fund on Additional Monitoring in Q4 2018. It is since no longer marketed to new clients due to concerns about the strategy’s long-term viability. These concerns relate to:

  • significant losses in assets under management over an extended period of time (from $792 million in December 2015 to $366 million as of December 31, 2019),
  • long-term performance issues,
  • and questions about its fit in the Canadian marketplace.

Following the latest developments, we have designated the Fund as Suggested For Removal. We encourage plan sponsors who currently offer the Fund to review it. Plan sponsors may consider removing or replacing it with an alternative fund on the Core investment platform. Sun Life’s governance activities on the Fund will continue for the time being. However, Sun Life may stop these activities in the future.

Questions?

Please contact your Sun Life Group Retirement Services representative.