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 under the Insurance Companies Act (Canada).

On May 1, 2024, Jarislowsky Fraser Limited (JF) closed the JF Special Equity Fund. The JF Special Equity Fund is not available as a standalone offering. It has been an underlying holding of the JF Canadian Equity Fund, with a maximum weight of 10%. The JF Balanced and JF Global Balanced both have exposure to the JF Canadian Equity Fund, therefore this announcement affects these funds as well, to a lesser degree.

The JF Special Equity Fund launched in 1995 at a time when the Canadian small capitalization market was less liquid. In order to gain access to small and medium-sized capitalization securities (SMID), JF decided that it was more efficient to hold these securities in the JF Special Equity Fund. JF could hold units of the JF Special Equity fund, allowing for simpler allocations of the underlying securities in the main funds.

As the Canadian small capitalization market has grown and become more liquid, JF has decided to terminate the JF Special Equity Fund and is now buying SMID securities directly. This change will result in improved transparency to the underlying securities held in each fund. There is no change to investment process or philosophy for the JF Canadian Equity, JF Balanced or JF Global Balanced Funds.

Because of this change, JF updated the Investment Policy Guidelines for the JF Canadian Equity, JF Balanced and JF Global Balanced Funds to reflect the minimum and maximum weights of the underlying exposures to SMID securities. You can find the revised Investment Policy Guidelines on Sun Life’s Plan Sponsor site at www.sunlife.ca/sponsor. When logged into the site, under the Investments tab, select Investments >> Governance reports.

How will this affect you and your members?

The closure of JF Special Equity Fund may result in a taxable capital gain or loss in non-registered (taxable) plans. If members have money invested in a non-registered plan, they’ll likely experience a capital gain or loss as a result of the total trading that JF will be doing within the funds. Sun Life will report any capital gains or losses reported by JF to the corresponding Sun Life segregated fund on the 2024 tax slips that we produce for members.

The change will not result in a taxable capital gain or loss for plan members if their money is invested in a registered (non-taxable) plan.

Below are the trades that JF expects to be doing within each fund as a result of the closure of the JF Special Equity Fund:

  • For the JF Canadian Equity Fund, JF expects to trade about 0.7% of the fund
  • For the JF Balanced Fund, JF expects to trade about 0.23% of the fund
  • For the JF Global Balanced Fund, JF expects to trade about 0.18% of the fund

Overall capital gains and losses may vary beyond the expected trades noted above, depending on overall trading within the JF Canadian Equity, JF Balanced and JF Global Balanced Funds.

Do you have to take any action?

All members invested in these funds will be notified of the changes in mid-June. Members invested in Non Registered Products will also be notified, via email in August. Click here for a copy of the member notification.  

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

We will send Non-Registered plan members in the impacted funds a communication to inform them of potential capital gains.

Questions?

Please contact your Sun Life Group Retirement Services representative.