As of July 20, 2020, Sun Life Global Investments (Canada) Inc. changed its name to SLGI Asset Management Inc. It will take some time to update our websites, materials and forms and until that is complete, all references to Sun Life Global Investments (Canada) Inc. will mean SLGI Asset Management Inc. We’ve also brought together Sun Life mutual fund, segregated fund, annuity and guaranteed investment product businesses under the collective brand of Sun Life Global Investments.

JPM International Equity

Fund commentary | Q3 2020

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Opinions and commentary provided by JPMorgan Asset Management.

Market review

Global equities continued to rally in the third quarter on resilient corporate performance, especially from technology stocks and an accommodative shift in the Federal Reserve’s long-term stance. However, volatility returned in September, with markets paring some of the gains as investors turned their attention to a possible second wave of COVID-19 infections, renewed lockdown measures and uncertainty about additional fiscal stimulus from the U.S. government. September’s flash composite PMI number came in below expectations at 50.1, indicating the pace of the recovery would be difficult to maintain as rising infection rates restricted activity. Also during the quarter, European Union (EU) leaders agreed to a EUR 750 billion recovery fund, a sign of improving fiscal cooperation within the bloc during an emergency. Among equities, growth stocks persistently outperformed value, while emerging markets outperformed developed markets over the quarter. 

Portfolio review

The portfolio outperformed its benchmark in the third quarter of 2020. At a sector level, stock selection in industrials and an underweight to energy contributed to performance, while an overweight to financials and stock selection in materials detracted. At the region level, stock selection in emerging markets and in the U.K. contributed to performance, while there were no regional detractors. 

Outlook

The portfolio outperformed its benchmark in the third quarter of 2020. At a sector level, stock selection in industrials and an underweight to energy contributed to performance, while an overweight to financials and stock selection in materials detracted. At the region level, stock selection in emerging markets and in the U.K. contributed to performance, while there were no regional detractors. 

Significant impacts on performance

Contributors

  • Kone OYJ
    (1.8% portfolio weighting) The Finland-based engineering and service company contributed to returns. Investors were encouraged by Kone’s continued market leadership within the consolidated elevator and escalator market, giving the company pricing power and strong profitability over a business cycle. 
  • Taiwan Semiconductor Manufacturing Co.
    (3.1% portfolio weighting) The Taiwanese semiconductor contract manufacturing and design company contributed to returns. Stock responded favorably to Intel’s announcement that foundry manufacturing services will be a contingency plan for the production of its leading-edge microprocessor products. 

Detractors

  • Legal & General Group 
    (1.5% portfolio weighting) The London-based financial services company detracted from returns. Investors were disappointed that the company kept the interim dividend flat year on year.  
  • Svenska Handelsbanken
    (1.3% portfolio weighting) The Swedish bank providing universal banking services detracted from returns. In September, management announced it will restructure the domestic branch network, which spooked some investors. 

Fund performance

Compound returns %1 Since inception2 1 year Q3
Sun Life JPMorgan International Equity Fund - Series A 4.9 9.8 6.2
Sun Life JPMorgan International Equity Fund - Series F 6.1 11.1 6.5
MSCI ACWI ex US Index 3.8 3.9 4.2

1Returns for periods longer than one year are annualized. Data as of September 30, 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

SLGI Asset Management 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 SLGI Asset Management 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.

© SLGI Asset Management Inc., 2020. SLGI Asset Management Inc. is a member of the Sun Life group of companies.