Addition of two real assets funds to the Core investment platform

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).

We are pleased to announce the addition of two real assets funds to our Core investment platform, effective immediately:

• Franklin Global Real Assets Segregated Fund provides access to private real assets (DB investment platform1).
• Sun Life Multi-Strategy Real Assets Segregated Fund provides access to publicly-traded real assets (DB and DC investment platforms).

The addition of both real assets funds represents our commitment to provide unique solutions to meet our Clients’ changing needs. Specifically, real assets provide inflation protection, diversification opportunities and growth potential. They have historically provided predictable income stream from long-term leases and contracts of underlying assets.

Why invest in real assets?

Real assets are physical assets and provide ownership of a store of value. Broadly, they include real estate, infrastructure and natural resources (such as agriculture, timber, water, food, etc.). They tend to preserve value in inflationary environment. They also have historically provided a predictable income stream from long-term leases and contracts of underlying assets. They serve as a diversifier due to their low correlation to traditional asset classes, such as equities and fixed income.

About Franklin Global Real Assets Fund

The Fund has a multi-manager structure. It invests in core, income-producing private and publicly-traded real assets with potential for growth. Investments include real estate, infrastructure, and agriculture, timber and water funds as opportunities arise. The Fund provides a globally diversified exposure across asset class, sector, geography, and revenue sources.

The Fund’s asset allocation ranges and underlying funds are as follows:

The Fund is not a daily traded fund. It has a special process for any deposits or redemptions (similar to the processes for other non-traditional funds available on our Core platform. These include the Bentall Kennedy Prime, Invesco Global Direct Real Estate, SLC Management Private Fixed Income Plus Fund and SLC Management Canadian Commercial Mortgage Fund). The Fund requires a minimum contribution amount of C$ 500,000 for each investment. Clients who want to invest in the Fund have to sign a Client Disclosure Letter indicating their subscription amount in Canadian dollars and the source of the funds.    

The Fund holds private assets with limited liquidity. That means the redemptions are restricted for the initial six months after the first investment. Following the six-month period, investors have more flexibility to redeem their investment. However, Sun Life requests that investors provide the redemption notice at least 15 days before the intended redemption date. Redemptions may take multiple quarters (possibly more than one year) to be completed.

About Franklin Templeton Investments

Franklin Templeton Investments is a global asset management firm with offices in North America, Europe, Asia and Australia. The firm manages C$ 937 billion of assets across markets and asset classes. That includes C$ 55 billion in alternative asset classes.

Franklin Real Asset Advisor (FRAA) group is the global real assets arm of Franklin Templeton Investments. FRAA has been investing in global real assets since 1984. The group focuses solely on the private and public real asset markets. Sixteen individuals are dedicated to private investments. Seven individuals are dedicated to the public market. The group is supported by Franklin Templeton’s global operation platform.

About Sun Life Multi-Strategy Real Asset Segregated Fund

The Fund has a multi-manager structure. It provides exposure to global listed real assets in infrastructure, Real Estate Investment Trusts (“REITs”) and natural resources, including agri-business, clean energy and water. The Fund seeks to provide diversification, inflation protection, and growth potential beyond traditional asset classes.

The Fund’s asset allocation mix is as follows.

The Fund’s benchmark is a combination of its underlying funds’ benchmark. The composition is 35% FTSE EPRA/NAREIT Developed, 35% S&P Global Listed Infrastructure and 30% S&P Global Natural Resource.

Sun Life Global Investments (Canada) (“SLGI”) is the investment manager of the fund. SLGI is responsible for the selection and monitoring of the underlying funds. SLGI actively monitors economic indicators, market fluctuations and market outlooks. As such, they may change the underlying investment managers and allocations over time (and within preset guidelines) to take advantage of attractive opportunities or to preserve capital. SLGI has also included this Fund as a component of the Sun Life Granite Target Date and Target Risk series.

About the underlying funds of the Sun Life Multi-Strategy Real Assets Segregated Fund

The Lazard Global Listed Infrastructure fund’s objective is to seek long-term, defensive, low volatility returns that exceed inflation. The fund aims to invest in a range of global “preferred infrastructure” companies. These companies offer the potential of higher revenue, profit certainty and lower volatility. They typically have a significant market share, ability to control price including adjusting price to inflation rate, stable demand, and operation in a developed economy and legal system. This fund is also available on Core platform.

The MFS Global REIT fund offers broad exposure to the commercial real estate asset class. The fund aims to outperform the FTSE EPRA/NAREIT Developed Market Real Estate Index over a full market cycle. Richard Gable is the lead Portfolio Manager since the fund’s inception in 2009.

The KBI Global Resource Solutions fund seeks to achieve strong long-term returns and diversification through investment in companies providing solutions to resource scarcity across water, food and energy. The fund avoids volatile extractive sectors, such as fossil fuel and precious metals. The investment team employs bottom-up, fundamental analysis to select companies across all market capitalization spectrum with a tilt towards small and mid-cap companies. The fund aims to outperform its benchmark, the S&P Global Natural Resources Index, by 3% per annum over 3-5 year periods with a similar volatility to the benchmark.

KBI is an institutional asset manager headquartered in Dublin, Ireland. The firm was established in 1980 and manages approximately C$ 16.7B of assets. KBI provides a new approach in managing natural resources exposure. It invests in companies that are providing solutions to food, energy, and water scarcity. KBI has managed water, agriculture and renewable energy strategies since 2000.

We are excited about these two fund additions to the Core investment platform and believe that they will provide plan sponsors and their members with some key benefits. Such benefits include inflation protection, diversification and growth potential.

What action is required by you and your plan members?

You and your plan members are not impacted by these changes and don’t need to take any action. You may wish to consider whether any of these new funds would be suitable additions to your lineup.

Questions?

Please contact your Sun Life Group Retirement Services representative.

1 The Franklin Global Real Assets Segregated Fund is also available for DC special custom portfolios that allow some exposure to non-daily valued/traded funds.