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).
Beginning in September, PH&N, a division of RBC Global Asset Management Inc (RBC GAM) began implementing small enhancements to the strategic asset mix within the PH&N Balanced Pension Trust Fund (the Fund). PH&N has stated that these adjustments aim to enhance diversification, optimize expected risk-adjusted returns, and leverage the investment expertise and capabilities of RBC GAM.
Enhancements to Asset Mix:
- PH&N will introduce a strategic allocation of 2% (initially 1%) to infrastructure, through investments in the RBC Global Infrastructure Fund LP. This infrastructure fund is designed to capitalize on global private infrastructure opportunities, offering potential yield and capital appreciation. The initial allocation is intentionally conservative to maintain liquidity, with gradual funding coming from both equities and fixed income.
- PH&N made a 4.5% allocation in September 2023 to the BlueBay Global Investment Grade Corporate Bond Fund. PH&N sourced this allocation from investments in global sovereign bonds. This adjustment seeks to balance the presence of sovereign and corporate bonds within the fund, ultimately aiming to increase the expected yield.
Summary of changes:
| Assets | Old | New |
|---|---|---|
| Cash | 1% | 1% |
| Fixed Income | 36% | 36% |
| Universe Bonds | 27% | 27% |
| High Yield Bonds | 1.5% | 1.5% |
| Global Sovereign | - | 4.5% |
| Global Investment Grade Corporate Bonds | - | 4.5% |
| Canadian Equities | 20% | 20% |
| Canadian Equities – Growth-biased | 13% | 13% |
| Canadian Equities – Value-biased | 5% | 5% |
| Canadian Equities – Small Cap | 2% | 2% |
| Global equities | 40% | 40% |
| Global Equities – Fundamental | 21.6% | 21.6% |
| Global Equities – Quantitative | 14.4% | 14.4% |
| Emerging Markets Equities | 4% | 4% |
| Direct real estate | 3% | 3% |
| Core Canadian Real Estate | 3% | 3% |
| Direct infrastructure | - | 2%1 |
| Core Global Infrastructure | - | 2%1 |
| Total | 100% | 100% |
1 RBC GAM expects to fund the infrastructure allocation pro-rata from equities and fixed income.
The current benchmark (below) will remain unchanged, but PH&N will re-evaluate the strategic benchmark weights, once the infrastructure allocation reaches its 2% target. The Statement of Investment Policies & Procedures (SIP&P) is unchanged as the benchmark remains the same, but will be updated when infrastructure is added and the benchmark changes.
- 1% FTSE Canada 30 Day T Bill
- 39% FTSE Canada Bond Universe Index
- 20% S&P/TSX Capped Composite Total Return Index
- 36% MSCI World Total Return Net Index (CAD$)
- 4% MSCI Emerging Markets Total Return Index (CAD$)
GRS Investment Solutions team views:
Sun Life’s Investment Solutions team has no concerns with the changes. They reflect the growing use of real assets within multi-asset class portfolios and institutional investing in general. Real assets can provide diversification and inflation protection. The modest allocation is prudent when considering the liquidity needs of a broad cross section of investors in this fund. We’ll continue to monitor the fund and advise of future developments.
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.
