After being in the annuity and segregated fund business for more than 20 years, in October Sun Life Financial launched its first dozen mutual funds entirely of its own making.
In doing so, the insurer has taken over all aspects of its mutual fund business, including production, distribution, and management. In addition, the company is appointing its subsidiaries to act as sub-advisors. Established in May, Sun Life Global Investments Canada is the name of the entity that will be offering the new funds.
Sun Life agents have been asking for access to MFS Investment Management for a long time. Sun Life's American subsidiary invented mutual funds in 1924, and is ranked among the top five performers in terms of three, five, and ten year rates of return.
Sun Life has listened: MFS will act as sub-advisor for its global equity, international, and American funds (two in each category), as well as its global balanced fund.
The lineup also includes four target date funds maturing in 2020, 2025, 2030, and 2035, and one money market fund for which the sub-advisor will be McLean Budden, a subsidiary in which Sun Life owns a 67% stake. The target date mutual funds are part of the Milestone fund lineup.
Sun Life is taking back control of its wealth management products in Canada in order to collect the revenues directly. By so doing, the insurer hopes to realize savings due to greater synergies. In an interview with The Insurance and Investment Journal, Sun Life of Canada president Kevin Dougherty said that, instead of increasing or simply reducing its stake in CI Investments, the company hopes to free up $2.3 billion in value from the business it has with the firm. “However, we will continue to manufacture and promote funds in collaboration with them,” he said.
Besides its international investment expertise, Sun Life wants to take advantages of its other strengths. “We will quickly reach critical mass in mutual funds thanks to our varied and well-established distribution channels, our base of more than five million investment clients, and our assets under management,” comments Mr. Dougherty,
The insurer already has more than $430 billion of mutual fund assets under management, $200 billion of which is with MFS. As far as new sales are concerned, Mr. Dougherty expects to surf the wave of baby boomers over the next fifteen years. “This segment of the population is worried about outliving their savings. Products like the Milestone funds respond to these concerns,” he says.