Fund commentary | Q1 2020

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Opinions and commentary provided by JPMorgan Asset Management.

Market review

The global economic picture deteriorated sharply in February and March as governments began to take extraordinary lockdown measures to contain the spread of the COVID-19 pandemic. Toward the end of March, the U.S. government approved a record fiscal stimulus package of over $2 trillion. The U.S. Federal Reserve Board also launched programs to support liquidity and demand for fixed income assets. The European Central Bank (ECB) launched asset-purchasing programs for a record €1.1 trillion to support the economy. The Bank of England slashed interest rates and announced measures to stabilize markets.

Crude oil prices plunged to levels last seen in 2002 as the Organization of Petroleum Exporting Countries (OPEC) and Russia failed to reach an agreement on reducing oil supply, while the outlook for oil demand fell sharply. Hence, energy stocks declined the most.

Over the quarter, value stocks underperformed growth stocks as the technology sector outperformed. Additionally, developed markets outperformed emerging markets.

Portfolio review

The portfolio outperformed its benchmark in the first quarter of 2020. At the sector level, stock- selection in Industrials and an underweight in Energy contributed to relative performance. Not holding Utilities and stock-selection in Healthcare detracted. At the regional level, stock-selection in continental Europe and emerging markets contributed to performance, while an overweight in the United Kingdom and an underweight in Japan detracted.

Significant impacts on performance


  • Nestlé (5.19% portfolio weighting). This Swiss food and beverage company contributed to returns. The company benefitted from the shift in consumer purchasing patterns towards increased staple goods purchasing during the uncertainty of the COVID-19 pandemic.
  • Novo Nordisk (2.79% portfolio weighting), this Danish pharmaceutical company contributed to returns. Investors were encouraged by Novo Nordisk’s progress in developing potential treatments for Type 2 diabetes and Alzheimer’s Disease.


  • Legal & General Group (1.87% portfolio weighting), a British financial services company, detracted from returns. Amid rising concerns related to the potential impact of COVID-19, bond yields and equities, which insurance firms rely on for returns, both fell. The likelihood of increased payouts in life and other insurance policies rose due to the virus outbreak.
  • Royal Dutch Shell (2.29% portfolio weighting), a British-Dutch oil and gas company, detracted from returns. Oil prices fell on demand concerns as fears intensified around the outbreak of COVID-19 and news that OPEC was struggling to reach an agreement on the timing of capacity restrictions.


Valuations for equities are in attractive territory, but the survival of some companies will be significantly tested. Those with strong balance sheets should survive. Looking at earnings in this unprecedented environment may be misleading, since the earnings decline is likely to be substantial for many businesses. However, the ratio of price to asset values is at or near previous crisis levels in most markets. Relative to bonds and cash, equities can also offer compelling return potential looking forward into the long term.

As many investors deleverage and look to raise cash wherever they can find liquidity, price movements from day to day can be chaotic. The unprecedented levels of fiscal and monetary support mean that governments and central banks have potentially staved off the threat of systemic collapse. Looking ahead, the portfolio manager anticipates the pace of infection will slow around the world as it has in China and believes the crisis is not over, but the impact is now likely embedded in prices.

Fund performance

Compound returns %1 Since inception2 1 year Q1
Sun Life JPMorgan International Equity Fund - Series A -3.8 -5.0 -13.6
Sun Life JPMorgan International Equity Fund - Series F -2.8 -3.9 -13.4
MSCI ACWI ex US Index -7.0 -10.0 -15.9

1Returns for periods longer than one year are annualized. Data as of March 31, 2020.

2Partial calendar year. Returns are for the period from the fund’s inception date of July 20, 2018 to December 31, 2018.

Views expressed are those of JPMorgan Asset Management (Canada) Inc.,, sub-advisor to select Sun Life mutual funds for which Sun Life Global Investment (Canada) Inc. acts as portfolio manager. Views expressed regarding a particular company, security, industry or market sector should not be considered an indication of trading intent of any mutual funds managed by Sun Life Global Investments (Canada) Inc. These views are not to be considered as investment advice nor should they be considered a recommendation to buy or sell. This commentary is provided for information purposes only and is not intended to provide specific individual financial, investment, tax or legal advice. Information contained in this commentary has been compiled from sources believed to be reliable, but no representation or warranty, express or implied, is made with respect to its timeliness or accuracy.

This commentary may contain forward-looking statements about the economy and markets, their future performance, strategies or prospects or events and are subject to uncertainties that could cause actual results to differ materially from those expressed or implied in such statements. Forward-looking statements are not guarantees of future performance and are speculative in nature and cannot be relied upon.

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Investors should read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. The indicated rates of return are the historical annual compounded total returns including changes in security value and reinvestment of all distributions and do not take into account sales, redemption, distribution or other optional charges or income taxes payable by any security holder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.

While Series A and Series F securities have the same reference portfolio, any difference in performance between these series is due primarily to differences in management fees and operating fees. The management fee for Series A securities also includes the trailing commission, while Series F securities does not. Series A securities of the fund are available for purchase to all investors, while Series F securities are only available to investors in an eligible fee-based or wrap program with their registered dealer. Investors in Series F securities may pay a separate fee-based account fee that is negotiated with and payable to their registered dealer.

© Sun Life Global Investments (Canada) Inc., 2020. Sun Life Global Investments (Canada) Inc. is a member of the Sun Life group of companies.