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).

TD Asset Management Inc. (“TDAM”) will add a new target date fund to its TD Greystone Target Date Plus series. Effective November 13, 2023, the TD Greystone 2065 Target Date Plus Segregated Fund (“TD Greystone 2065”) will be available as part of the series.

Investment managers periodically add new longer-dated funds to their target date series to match the time horizons of younger plan members. Plan members expecting to retire around the year 2065 may find the new fund more appropriate. The TD Greystone 2065 fund’s target asset mix will initially be similar to the TD Greystone 2060 fund, but will diverge over time.

How will this affect you and your plan members?

You or your plan members don’t have to take any action. If you currently offer the TD Greystone Target Date Plus funds to your members, Sun Life will automatically add TD Greystone 2065 to your line-up on November 13, 2023.

We’ll post a notice at mySunLife.ca about the TD Greystone 2065 addition for members who currently invest in the TD Greystone 2055 or TD Greystone 2060 funds. Before the TD Greystone 2065 addition, TD Greystone 2060 had the longest time to maturity. Younger plan members who joined their plan(s) recently might have defaulted into or selected TD Greystone 2055 or TD Greystone 2060. If they expect to retire around the year 2065, they may review and decide whether TD Greystone 2065 is more suitable for them. Members may also direct future contributions to TD Greystone 2065.

If members choose to move money from a different fund to TD Greystone 2065, the transaction may result in realized capital gain or loss. This may be deemed a taxable event in non-registered plans.

The notice is available in the Communications section at mySunLife.ca.

Plan members can view and select the funds available within their plan through mySunLife.ca.

Update on allocation to alternative asset classes

TDAM expects significant new flows into TD Greystone Target Date Plus in Q4 2023. These flows will temporarily reduce the allocation to alternative assets (also known as “dilution”). The alternative assets consist of Canadian and global direct real estate, direct infrastructure and commercial mortgages.

The target allocation to alternative assets is between 18% and 25% across all maturities. As of June 30, 2023, the allocation to alternative assets ranged from 11.6% (2060 fund) to 27.3% (2030 fund). TDAM has

provided Sun Life with estimates that the allocation to alternatives will decrease to between 1.5% and 12.5%, after the expected flows.

The lower allocation may temporarily change the risk-adjusted return expectations and diversification of the Target Date Plus funds. However, TDAM will bring the alternatives allocations back towards long-term targets over time. Target Date funds are designed for long-term investment. The negative effect of short-term dilution of alternatives is minor relative to their expected long-term benefits.

The significant inflows into TD Greystone Target Date Plus have some benefits. A larger asset base will provide scale. TDAM will also be able to further diversify the investment in the alternative assets and reduce the effect from the dilution. In addition, a larger asset base will reduce operating expenses over time.

Please note that we provide this update about allocation to alternative asset classes only for sponsors. The member communication will cover TD Greystone 2065 addition only.

About the TD Greystone Target Date Plus series of funds

The goal of the TD Greystone Target Date Plus series is to deliver strong long-term returns along with reduced return volatility, as their maturity date approaches. The investments in riskier assets (e.g. equities) will decrease, while investments in lower risk assets (e.g. fixed income) will increase, to reduce return volatility as each fund gets closer to maturity.

The series’ glidepath balances market risk with timing (also known as sequence of returns risk) that plan members face as they approach retirement. This glidepath shape reduces equity exposure in the funds earlier than most other target date series. TDAM believes that the exposure to alternative investments allows this earlier de-risking.

For more information about the series, please click here.

Questions?

Please contact your Sun Life Financial Group Retirement Services representative.