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Sun Life Excel India Fund

Fund commentary | Q1 2020

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The quarter was dominated by news of the global spread of the novel coronavirus, COVID-19. In an effort to control the spread of the virus, countries around the world implemented various lockdown and social distancing measures, restricting movement and limiting business activity to only the most essential businesses. India imposed a nationwide lockdown on March 24, 2020, initially planned to last 21 days, but was later extended to May 3. The restrictions on travel, social activity and all but essential economic activity across the entire country of 1.3 billion people, makes it the largest such initiative anywhere in the world.

Worldwide lockdowns and concerns over the resulting economic impact sparked a global market selloff in March. Indian markets followed suit and were also down significantly at the end of the first quarter. The IMF released revised growth projections for global economies in 2020, downwardly revising India’s annual GDP growth to 2% from an initial projection of 6%. While it may be too early in the unprecedented fight against the COVID-19 pandemic to make any accurate projections, India stood out as one of only two major global economies predicted to have a positive growth profile in 2020. India’s early and largescale lockdowns may be proving effective in curtailing the spread of the virus, as a the world’s second most populous country has only 20,000 cases as of mid-April.

The Fund’s underperformance over the quarter was largely attributable to overweight positions in Financials and Industrials sectors, both of which underperformed due to the lockdowns and the resulting economic slowdown. The Fund’s underweight position in defensive sectors like Consumer Staples also contributed negatively to performance. However, over the quarter, the portfolio manager started to position the Fund more defensively to prepare for the possibility of a global recession in the near future. The Fund reduced its overweight position in Financials, and increased allocation to Health Care and Consumer Staples sectors. Within Financials, the Fund also reduced its allocation to public banks and added to certain good quality private sector banks.

Fund performance

Compound returns %1 Since inception2 10 year 7 year 5 year 3 year 1 year Q1
Sun Life Excel India Fund - Series A 8.9 3.5 7.4 -1.7 -7.4 -29.4 -28.6
Sun Life Excel India Fund - Series F 6.7 4.7 8.6 -0.6 -6.3 -28.5 -28.4
MSCI India Index 7.5 3.0 6.1 -1.2 -4.6 -26.3 -24.4

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 Series A: April 14, 1998 to December 31, 1998 and Series F: January 4, 2005 to December 31, 2005.

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.