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. They are established as segregated funds under the Insurance Companies Act (Canada).

Starting February 15, 2024, Paul Marcogliese, a PM on the Fixed Income team, departed from CI Global Asset Management (CI GAM). Marcogliese primarily focused on the CI Canadian Core Plus Bond Fund, representing 3.0% to 7.3% of the CI Portfolio Series Funds. Additionally, Marcogliese supported the CI Canadian Bond Fund alongside John Shaw, Portfolio Manager (PM) and Investment Grade Credit Lead. CI Portfolio Series’ exposure to the CI Canadian Bond Fund ranges from 4.4% to 19.5%.

Grant Connor, PM, assumed Marcogliese's portfolio management responsibilities. Connor joined CI GAM in 2013 and has worked with Marcogliese since 2016, including co-managing the CI Canadian Core Plus Bond Fund. He has 15 years of investment experience.

Connor will manage the CI Canadian Core Plus Bond Fund with support from Shaw, who will lead the investment grade credit and preferred shares component of the fund. Connor will primarily manage the duration and government bond positioning. Together, Connor and Shaw will manage the overall asset mix of the fund, positioning it similarly to the CI Canadian Bond Fund.

Connor and Shaw will also be supported by various members of the CI GAM Fixed Income Team, including Fernanda Fenton, PM and Global Rates Lead, and Geof Marshall, Head of Fixed Income - Private Markets.

Geoff Marshall has been Head of Fixed Income since 2023, overseeing an evaluation of the team's resources. Sun Life met with Marshall to discuss the changes. Marshall indicated that CI GAM believes Connor’s approach will better align with how they want to manage fixed income strategies. Marshall indicated that under Marcogliese, the portfolio’s positioning was more unconstrained than what was expected for a Core Plus mandate. This led to underperformance. Marshall provided detailed examples and indicated his belief that Connor and Shaw will manage the portfolio to exhibit characteristics typical of a Core Plus Bond fund going forward. Marshall expressed no concern with the management of the CI Canadian Bond Fund.

Marshall further indicated that he has spent the past few months evaluating the team in terms of resources and has been active from a hiring standpoint. He will evaluate Connor’s performance over the coming quarters and determine how to best utilize him within the team. He expressed that the Rates Team is now a younger team and that he will assess whether they need more experience.

Sun Life GRS Investment Solutions’ view

While we are comfortable with Connor’s experience, the departure of Paul Marcogliese raises some concerns. CI GAM has experienced high turnover since 2022. Several departures among senior staff and analysts occurred following organizational changes within CI GAM. Marcogliese is another experienced departure in a long line of experienced talent that has left the firm. The amount of turnover may moderate as the firm settles into its new structure and staff that buy into the new approach.

We also have concerns that CI GAM didn’t address the unconstrained approach to the Core Plus mandate. If the level of active risk or types of risks taken didn’t align with CI GAM’s expectations for the mandate, CI GAM should have proactively identified this and taken appropriate action, instead of reacting only after a period of underperformance.

In 2023, Sun Life GRS decided to no longer offer the CI Portfolio Series funds to plan sponsors that didn’t already offer them, due to a lack of client interest and significant sponsor redemptions.

We will continue to monitor the firm and provide updates as necessary.

Questions?

Please contact your Sun Life Group Retirement Services representative.