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 under the Insurance Companies Act (Canada).

Fidelity Investments Canada recently announced that they will be adding alternative investments (alternatives) to the strategic allocation of the Fidelity ClearPath® Institutional Portfolios (ClearPath®). The changes are based on Fidelity's research, which suggests that target date investors may benefit from the increased diversification that comes from alternatives. Periodic updates to the strategic allocation and glide path are standard parts of Fidelity's investment process to effectively manage ClearPath®.

Fidelity plans to gradually add alternative asset classes to ClearPath® aiming for a target strategic allocation of 5% of each portfolio and a maximum allocation of 10%. The actual allocation in alternatives may vary over time due to factors like active allocation views, client cash flows, market performance, and liquidity dynamics. The initial alternatives allocation will be to direct real estate. Fidelity may add other alternatives exposures at later dates.

In selecting and monitoring the manager(s) for the alternatives allocation, Fidelity will draw on the resources and experience of Strategic Advisors (SAI), a multi-asset group within Fidelity's Asset Management Division. SAI manages nearly $900 billion in assets with both internal and external managers handling investments across various regions and asset classes, including numerous managers of alternative assets.

GRS Investment Solutions team views:

We have seen other target date series and multi-asset class funds add exposures to alternatives in recent years. We believe that alternatives can provide valuable diversification beyond equities and bonds, when implemented well. Alternatives such as direct real estate are illiquid but with the small target allocation (5%) we do not expect this to negatively impact the liquidity of ClearPath® as a whole.

Fidelity expects to introduce direct real estate to ClearPath® in the coming quarters and we will provide a further update at that time. We will also make updated fund policies available on the plan sponsor web site once they are updated.

Do you have to take any action?

You and your members don’t have to take any action as a result of these changes.

Questions?

Please contact your Sun Life Group Retirement Services representative.