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).

In the first quarter of 2023, TD Asset Management (TDAM) announced changes to the glide paths of the TD Greystone Target Date Plus series of funds.  These funds were recently added to the Sun Life core investment platform.

The changes are based on TDAM’s forward-looking asset class assumptions and capital market expectations, as well as socio-economic and demographic assumptions.  TDAM reviews the asset mixes and glidepath of their Target Date Plus series of funds on an annual basis.  As TDAM’s economic outlook changes and new information becomes available, characteristics of the asset classes such as forward-looking return expectations, correlations and standard deviations also change.  To ensure asset mixes and the glidepath remain optimal, TDAM makes adjustments over time.

TDAM made the following changes to the asset allocation and hence, glidepath of the Target Date Plus series of funds:

  • A modest increase to equity allocations across all target date funds; 
  • Within Equities, an increased allocation to growth and low volatility strategies and a decrease to dividend strategies;
  • Within fixed income, an increase in nominal bonds and high-yield bonds and a decrease in inflation-linked and investment grade bonds;
  • Within Fixed Income, a decrease in duration through more short-term bonds and less long-term bonds; and
  • An increase in commercial mortgages in shorter-dated funds and a reduction in longer-dated funds.

TDAM implemented the changes in the first quarter of 2023. Below is a summary of TDAM’s strategic asset mix changes. 

Year-over-year Strategic Asset Mix Change

Consistent with the process for the TD Greystone Target Date Plus Funds on an annual basis the glide path is formally examined through the Annual Glide Path Update. This involves running the proprietary TD Asset Management Glide Path Analytics to help incorporate any evolutions in available asset classes or funds, long-term asset class assumptions or demographics. The most recent Annual Glide Path Update was conducted in November 2022 and the resulting changes were implemented in January 2023. The table above illustrates the year-over year strategic asset mix changes.

1 The TD Greystone Mortgage Fund.
2 Includes the TD Greystone Real Estate LP Fund and the TD Greystone Global Real Estate LP Fund.
3 The TD Greystone Infrastructure Fund (Canada) LP II invests in units of the TD Greystone Infrastructure Fund (Global Master) LP.
Source: TD Asset Management Inc. As of Dec 31, 2022.

For more information on the update to the glidepath, please refer to TDAM’s article.

GRS Investment Solutions View

Despite the increase in fixed income yields, TDAM’s models determined that more equities across the glidepath were required to meet the return objectives. Other target date fund providers have also increased equity allocations in recent years. TDAM forecasts a modest increase in return expectations for equities. The reduction in duration for fixed income reflects the inversion of the yield curve, where short-term bond yields are greater than long-term bond yields. The reduction in private real estate was driven by the narrowing of its risk premium over public markets. 

We are comfortable with the changes.

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.