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By holding a mix of bonds and equities across different markets and countries, some may be increasing in value while others are falling. This can help reduce the risk that comes from being overly concentrated in just a few investments. And over time, it tends to reduce volatility and smooth out returns.

Use the chart below to see how being diversified can help reduce risk

Pick an asset class from the boxes below and follow it across. As it reacts to market and economic conditions, the asset class may be a top performer one year and the worst the next. Now compare it to a hypothetical diversified portfolio*, which invests in a number of asset classes, and you will see the returns are less volatile and more consistent over time.

The table is a series of coloured boxes with percentages in each box. The highest percentage is at the top and the lowest is at the bottom.   There are 11 columns labelled for each year from 2010 to 2020. There are eleven rows with coloured boxes below each year. Each colour represents a different asset class.   The asset classes are: A diversified portfolio*; Canadian equity; U.S. equity; International equity, Emerging markets equity, Global equity, Real estate, Infrastructure, Canadian bonds, U.S. bonds, Global bonds.   The box closest to the top represents the best performing asset class for that year, and the bottom represents the worst performing asset class.   In 2010, Canadian equity is at the top of the chart, with a return of 18%. In 2011, Canadian equity fell to the ninth row (third from the bottom) with a -9% return. In 2012, the return is 7%, but it only moved up one row to the eighth spot (fourth from the bottom) meaning seven other asset classes returned more than 7% that year. In 2013, the return was 13%, and it moved up to the sixth row, right in the middle of the chart. In 2014, the return was 11% and it moved down to the seventh row. In 2015, Canadian equities returned -8% and moved down to the last row in the table.   Through the approximate middle of the table are white boxes showing a diversified portfolio*.  In 2010: 7% return – 5th row (one spot above centre) In 2011: 0% return – 6th row (exact centre) In 2012: 9% return – 6th row (exact centre) In 2013: 15% return – 5th row (one spot above centre) In 2014: 14% return – 6th row (exact centre) In 2015: 12% return – 7th row (one spot below centre) In 2016: 5% return – 5th row (one spot above centre) In 2017: 10% return – 6th row (exact centre) In 2018: 0% return – 6th row (exact centre) In 2019: 15% return – 7th row (one spot below centre) In 2020: 6% return – 7th row (one spot below centre)

For illustrative purposes only. Returns have been rounded to the nearest whole number for simplicity. *The Diversified Portfolio is a hypothetical portfolio that is invested 10% in each asset class shown. The Diversified Portfolio is not intended to represent any investment managed by Sun Life Global Investments. It is not possible to invest in an index. For more information on the indices used to represent each asset class, please see below.

At Sun Life Global Investments, we believe long-term investment success requires effective risk management, and diversification plays a powerful role in that strategy.

For more information, speak to your advisor.


Equity returns are represented by the following indices in C$ terms and include reinvestment of dividends: U.S. stocks: S&P 500 Index; Canadian stocks: S&P/TSX Capped Composite Index; International stocks: MSCI EAFE Index; Emerging market stocks: MSCI Emerging Markets Index; Global stocks: MSCI World Index; Real estate: FTSE EPRA/NAREIT Developed Index; Infrastructure: S&P Global Infrastructure Index; Canadian bonds: FTSE Canada Universe Bond Index; U.S. bonds: Barclays U.S. Aggregate Bond Index; Global bonds: Barclays Multiverse Index. The performance of each index including the diversified portfolio is provided to illustrate historical market trends; it does not represent the performance of a particular Sun Life Global Investments product. Source: Morningstar. Data as of year-end.

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 information contained in this document is provided for information purposes only and is not intended to represent specific individual financial investment, tax or legal advice nor does it constitute a specific offer to buy an/or sell securities. While the information contained in this document has been obtained from sources believed to be reliable, SLGI Asset Management Inc. cannot guarantee its accuracy, completeness or timeliness. Information in this document is subject to change without notice and SLGI Asset Management Inc. disclaims any responsibility to update it.

Sun Life Global Investments is a trade name of SLGI Asset Management Inc., Sun Life Assurance Company of Canada and Sun Life Financial Trust Inc.

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