Sun GIF Solutions Strategic Income is designed for Clients seeking a lifetime guaranteed income within five years of their deposit, with ongoing access to their money as needed. The Fund is available within Sun GIF Solutions Income Series, which provides:
- A lifetime income guarantee as early as age 50, with the guaranteed income amount based on minimum income rates at the time of deposit. Each year the Client defers electing income, a higher lifetime guaranteed income becomes available.
- A guarantee of 75% of deposits at maturity (age 100).
- A guarantee of 75% of deposits upon death.
The Fund's objective is the generation of lifetime guaranteed income, so its investment focus is on secure, investment-grade fixed income investments. The Fund invests in a mix of:
- Public fixed income investments (about 90% of the Fund).
- Private assets, including private fixed income and commercial mortgages (about 10% of the Fund).
SLC Management is the brand name used by Sun Life Capital Management (Canada) Inc., the registered entity that manages the Fund's investments.
The public fixed income portion of the Fund invests in a variety of fixed income investment types, including:
- Government of Canada bonds,
- Provincial and municipal bonds, and
- Canadian and U.S. corporate bonds.
Public fixed income investments provide a consistent stream of income, with generally less volatility than equity market investments. The public fixed income asset class is multidimensional, with bonds that can be issued in many different maturities, from several different places in the capital structure (holding companies, operating companies, finance companies), and can be secured by assets or unsecured. Public fixed income investments trade on secondary markets and can be bought and sold at any time.
These investments are often used in liability matching strategies for pension plans, insurance companies and other institutional investors, as they are well suited to capital preservation goals. High quality fixed income investments provide far greater security of capital than equity investments.
The Fund invests in private fixed income investments issued by companies or entities outside of the public capital markets.
Unlike public fixed income investments, the private fixed income asset classes don't trade on secondary markets and are designed to be held to maturity. They offer a number of benefits when combined with a portfolio of public assets. Experience shows these investments have delivered:
- Higher returns over similarly rated public market bonds
- Lower losses and higher recovery rates
- Lower return volatility and improved portfolio diversification as a result of their low correlation to traditional asset classes.
The Fund invests in Canadian commercial mortgage investments classified as investment grade and typically fixed-rate first mortgage loans secured by high quality income-producing office, retail, industrial and multi-family rental properties located in Canadian urban markets.
These mortgage loans are generally made to qualified, financially strong borrowers with expertise in the ownership, management and operation of commercial real estate and/or multi-family rental properties.
Commercial mortgages can improve the diversification of a fixed income portfolio, with lower historic volatility than universe bonds, corporate bonds and equities, and a low correlation to other asset classes, especially equities. This lower correlation to traditional fixed income asset classes and real estate equity may offer the potential to improve the efficient frontier of a fixed income portfolio.
SLC Management has extensive experience in liability-driven investing for institutional Clients such as pension plans and insurance companies. Liability-driven investing involves the customized matching of Fund assets to align specifically with the profile of the Fund's liabilities. For Sun GIF Solutions Strategic Income, the liability is the promise of lifetime guaranteed income to investors, along with maturity and death benefit guarantees.
To best align Fund assets to these liabilities, the Fund invests in a mix of public and private fixed income investments, with public investments providing low volatility, secure income, and liquidity, and the private asset classes providing diversification and enhanced yields.
SLC Management has dedicated public and private fixed income teams in Canada and the United States - with extensive expertise in credit research and analysis, and trading professionals to deliver and execute across all fixed income asset classes. The firm is supported by over 200 investment professionals accountable for managing more than $145 billion in assets for the Sun Life Financial group of companies.
- Public fixed income: The public fixed income team has global industry experts who manage credit risk across Canadian, U.S., U.K. and Asian portfolios, along with sophisticated derivative capabilities to manage interest rate and currency risk. They also have broad market access due to long-term relationships with multiple investment dealers.
- Private fixed income and commercial mortgages: The private fixed income and commercial mortgages team manages one of the largest private fixed income portfolios in North America - and operates under a highly developed infrastructure of investment processes and risk controls. Their experience in credit research, credit analysis, credit structuring and legal and operational due diligence, allows them to source private debt investments worldwide.
Sun Life Capital Management (Canada) Inc. is a Canadian registered portfolio manager, investment fund manager, exempt market dealer and in Ontario, a commodity trading manager, and is the manager of the SLC Management Private Fixed Income Plus Fund, SLC Management Long term Core Fixed Income Fund, SLC Management Core Fixed Income Fund and the SLC Management Canadian Commercial Mortgage Fund.