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).
Sun Life regularly reviews the Core investment platform in response to Client interest and evolving fund offerings in the market.
We’re pleased to announce the addition of IFM Global Infrastructure Segregated Fund (“the Fund”) to our DB investment platform1. The manager of the Fund, IFM Investors (“IFM”), is a new investment partner on our platform.
The fund is the first global direct infrastructure strategy on the Sun Life DB investment platform. Direct infrastructure, like other real assets, provides diversification versus traditional asset classes. Compared to traditional asset classes, infrastructure offers stable long-term cash flow generation, long-term growth potential and increased inflation sensitivity. Direct infrastructure provides better diversification than listed infrastructure (i.e. publicly-traded infrastructure companies), as it isn’t subject to equity market movements.
About the IFM Global Infrastructure Segregated Fund
Infrastructure investments in the Fund generally include airports, toll roads, port facilities, water concessions, storage terminals, and pipelines. The fund invests primarily in OECD (Economic Co-operation and Development) countries that possess the following characteristics:
- Benefit from global or regional economic growth
- Stable regulatory environment
IFM targets companies with the following characteristics:
- Key assets providing essential services to communities in the energy, water, transport, telecommunications and social infrastructure
- Secure, competitive position with monopolistic characteristics, high barriers to entry and a limited availability of substitutes
- Long-term, stable and predictable revenue streams that may be linked to inflation
- Strong margins and low operating leverage
The Fund seeks to achieve a target net2 return of 10% per annum over the long term, through investment in global core infrastructure assets. This target can range from 8% and 12% over the short term, depending on the market cycle. As of March 2022, the Fund invested in 36 companies that operate across over 20 countries. IFM employs a total return strategy that delivers both capital growth and cash yield using conservative levels of leverage. Typically, asset level leverage ranges from 30%-70%, with a weighted average limit of 60%. IFM prioritizes the long-term value creation, sustainability of their assets, and strong outcomes to their investors.
The Net Asset Value of the segregated fund includes IFM’s performance-based fees, which vary from year to year. As a result, operating expenses can vary based on the performance of the fund.
The Fund’s benchmark is the Consumer Price Index (CPI) +4%. CPI-based benchmarks are common for direct real assets funds in Canada.
The Fund is valued quarterly. It has quarterly independent valuations conducted for all companies in the portfolio. As the Fund invests in illiquid assets, it has special processes for subscriptions or redemptions.
1) There is a minimum investment of CAD$1 million. This includes the initial investment as well as subsequent investments.
2) The Fund has quarterly subscriptions and redemptions schedule. IFM requires Sun Life to provide:
- Notices of subscription at least 30 days before the end of the quarter
- Notices of redemption at least 90 days before the end of the quarter
Given the requirements above, Sun Life requests that Clients provide the subscription and redemption notices at least 35 and 95 days before the end of the quarter, respectively. Due to changes in Client demand and investment opportunities, the Fund may become oversubscribed. When oversubscribed, subscriptions will take the form of commitments that are placed in a queue and are drawn down in subsequent quarters by commitment date.
3) Clients who want to invest in the Fund must sign a Client Disclosure Letter.
IFM’s history started in 1990 with the formation of the Development Australia Fund (DAF). The DAF was created by Australian pension funds to invest in Australian private and public companies, as well as infrastructure. IFM launched the IFM Australian Infrastructure Fund in 1995 to provide Australian pension funds with diversified Australian infrastructure investments. In 2004, IFM Investors launched the IFM Global Infrastructure Fund to invest in international infrastructure assets.
Today, IFM is a global investment manager with 10 offices in Australia, Europe, North America, and Asia. IFM is a subsidiary of Industry Super Holdings Proprietary Limited, which is owned by 25 Australian pension funds. IFM operates as a separate business entity with a sole focus on institutional fund management. The firm manages diverse assets across infrastructure, debt investments, listed equities, and private capital. As of March 31, 2022, IFM managed USD$135 billion, of which 47% represented direct infrastructure assets.
IFM embeds responsible investment considerations into their investment decision-making process. The firm has been a signatory to PRI since 2008 and has committed to the Net Zero Asset Manager Initiative.
Do you have to take any action?
You don’t need to take any action. You may consider whether the new fund would be a suitable addition to your lineup.
Please contact your Sun Life Financial Group Retirement Services representative.
1 The IFM Global Infrastructure Fund is also available for DC special custom portfolios that allow some exposure to non-daily valued/traded funds.
2 Net of advisory fees, any Performance Fees, allocable expenses, and investment-level taxes.