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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 High Income Fund

Fund commentary | Q2 2020

Opinions and commentary provided by Amundi Asset Management.

In the second quarter, some of the Fund’s overweights were reduced, tactically selling down positions that experienced a strong rally. The Fund profited from reducing its overweight positions in Brazil and Russia and moving to neutral positions. During the quarter, the Fund also decreased its overweight in Indonesia and South Africa due to worsening fiscal positioning and growth prospects in these regions. The Fund added to its position in high-quality investment grade names in Saudi Arabia, Qatar and UAE at relatively low valuations after having maintained a structurally bearish view due to their lack of currency flexibility.

Q2 began with an improved market sentiment after the lows seen in March, driven by fiscal stimulus, accommodative monetary policies, and expectations that lockdown restrictions would be gradually lifted. Governments announced stimulus measures, with key ones in developed markets. Europe announced a €540bn short-term package and the U.S. unveiled a stimulus package totaling nearly US$3 trillion.

Major economies slowly eased out of lockdown restrictions and began a new “back to normal” in May. In the U.S., easing of lockdown measures, hopes for potential COVID-19 treatment and vaccine, and an earlier-than-expected financial recovery amidst dovish comments from the U.S. Fed brought optimism to investors. On the other side, optimism was somewhat curbed by renewed U.S.-China tensions and worsening economic data. Around the world, the daily number of confirmed COVID-19 cases continued to surge in May. Most of the new cases were concentrated in emerging markets, until June, when states across the U.S. reopened their economies and the U.S. also became a strong contributor to the rising global case total. Oil prices rebounded from their all-time lows, hovering around US$40 at quarter-end. 

Overall, the second quarter and first half of 2020 ended on a positive note as risk assets continued to rally into June. Market sentiment remained volatile during the month of June, as investors balanced fears of a second wave of COVID-19 outbreaks on one hand, and expectations for a V-shaped economic recovery amidst an easing of lock-downs buoyed sentiment on the other. Central banks and governments, both globally and within emerging markets, remained highly accommodative, using a range of monetary and fiscal policies to support their economies. Notably, asset purchase programs became increasingly common across emerging markets with central banks across Africa, Latin America, Eastern Europe and South-East Asia reiterating their need for such programs in order to stabilize their financial markets. On debt restructuring in emerging markets, the most vulnerable countries continue to be supported by the backstop from the IMF and G20, as well as China in the case of the Sub-Saharan African countries.

Fund performance

Compound returns %1 Since inception2 7 year 5 year 3 year 1 year Q2
Sun Life Excel High Income Fund - Series A 4.8 4.5 3.0 0.5 -1.0 7.1
Sun Life Excel High Income Fund - Series F 6.0 5.7 4.1 1.5 0.0 7.3
Benchmark* 5.9 6.2 5.6 3.9 3.6 5.8

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 Series A: October 22, 2010 to December 31, 2010 and Series F: November 4, 2010 to December 31, 2010.

*Benchmark: 50% JP Morgan GBI-EM Global Diversified Composite Unhedged Index; 50% JP Morgan EMBI Global Diversified Composite Index.

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.