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.

Sun Life Excel Emerging Markets Fund

Fund commentary | Q2 2020

Download PDF

Opinions and commentary provided by Schroder Investment Management.

Overall, emerging markets delivered a positive return in Q2 2020, with the fund outperforming the benchmark index. Country allocation was a negative contributor to performance and stock selection was positive.

An underweight position to South Africa and zero-weight to Thailand, both of which outperformed in a risk-on environment, detracted from fund performance, as did the fund’s cash position in a rising market. South Africa, after initially announcing a strict lockdown to control the spread of COVID-19, started to reopen its economy, as was evidenced by a marked improvement in economic data. Thailand outperformed on hopes of a recovery in global demand in the second half of 2020.

These effects were somewhat offset by an overweight position to Argentina, which outperformed. Argentina rallied sharply, underpinned by a rally in large index stock Globant.

Stock selection was positive overall in Q2. In Russia, an off-benchmark holding in internet services company, Yandex, contributed to returns after markets reacted positively to the company’s agreement to end its joint venture with Sberbank during the quarter. In addition, an overweight to Moscow Exchange benefitted returns after stock rose on stronger-than-expected Q1 earnings results, supported by a pick-up in fee and commission income amid increased market volatility.  An underweight to Norilsk Nickel was also beneficial after a major diesel spill resulted in significant environmental damage and stock underperformed.

In Argentina, an off-benchmark holding in Mercadolibre, an online marketplace and e-commerce platform, contributed to returns after COVID-19 lockdowns bolstered demand and stock outperformed. An overweight position in Delta Electronics in Taiwan and overweights to Naver and Samsung SDI in Korea also contributed positively to fund returns. In Brazil, a zero-weight to Banco Bradesco positively impacted performance, as the bank as has been affected by competition from new entrants, as well as concerns over the impact of COVID-19 on growth and overall asset quality.

Stock selection in India was negatively impacted performance. A zero-weight to Reliance Industries negatively impacted fund performance. Stock rose after the multi-national conglomerate succeeded in reducing leverage by raising funds from the sale of its stake in the telecom business, Jio. Overweight positions in ICICI Bank and Tata Consultancy also detracted from overall performance. ICICI Bank has been impacted by concerns over deteriorating asset quality for Indian banks, despite a government led moratorium in the short term. Tata Consultancy’s business and share price was relatively resilient earlier in the year, however the stock lagged the Q2 market recovery.

Fund performance

Compound returns %1 Since inception2 7 year 5 year 3 year 1 year Q2
Sun Life Excel Emerging Markets Fund - Series A 1.0 6.0 4.3 3.0 0.2 13.1
Sun Life Excel Emerging Markets Fund - Series F 2.1 7.1 5.4 4.1 1.3 13.4
MSCI Emerging Markets Index 5.9 7.1 4.7 3.5 0.7 13.0

1Returns for periods longer than one year are annualized. Data as of June 30, 2020.

2Partial calendar year. Returns are for the period from the fund’s inception date of October 1, 2010 to December 31, 2011.

Views expressed are those of Schroder Investment Management North America 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.