Effective November 27, 2021, the deferred sales charge and low load sales charge purchase options will no longer be available for purchase on Sun Life Global Investments mutual funds. Switches between funds of the same sales charge purchase option will be permitted.

Sun Life Aditya Birla India Fund

Fund commentary | Q2 2021

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During the second quarter, India saw the second wave of COVID-19 peak in May and then subsequently decline across the country. Some of the states witnessed a faster reopening of businesses from regional lockdowns imposed during the second wave. With the increase in vaccine availability, there was an increase in the pace of vaccination. At the end of the quarter, India had vaccinated more than 270 million people. This led to an improvement in consumer and business sentiment.

Mobility and economic indicators showed an uptrend with the impact of the second wave lower than anticipated. The equity markets came down in April due to apprehension around the second wave. But the markets moved up later in the quarter as new cases started to come down.

India is exhibiting increased linkages to global growth and fund flows. Consequently, exports have showed robust growth. India has also seen a steady acceleration in foreign direct investment. This has taken forex reserves to an all-time high and improved macro stability.

 Monetary and fiscal policies continued to remain supportive of a economic recovery. Momentum in reforms has also picked up pace, leading to productivity gains. The Indian meteorological department has predicted above normal monsoons, which also bodes well for the rural economy. However, the growth forecast for the economy has been revised downward by the portfolio manager to 10% for the fiscal year  2022 due to the impact of the second wave.

In fiscal 2022 earnings estimates for the MSCI India Index has been upgraded to ~41% year over year. Going forward, earnings are likely to normalize with earnings growth projected at ~17.1% for fiscal 2023. The portfolio manager believes, earnings could be impacted in a possible third wave of COVID-19. Butthe impact is expected to be lesser than in the previous waves.

Headline valuation multiples in India seem rich due to depressed earnings, but may remain elevated versus long-term averages due to high liquidity. However, from a medium-term perspective, valuations seem fair, as the economy and earnings are likely to normalize by then.

COMPOUND RETURNS %¹ SINCE INCEPTION² 10 YEAR 7 YEAR 5 YEAR 3 YEAR 1 YEAR Q2
Sun Life Aditya Birla India Fund - Series A 10.7 8.3 10.3 9.6 5.6 39.7 5.7
Sun Life Aditya Birla India Fund - Series F 9.4 9.5 11.6 10.9 6.8 41.3 6.0
MSCI India Index 10.2 8.2 10.2 10.9 9.8 42.7 5.4

¹Returns for periods longer than one year are annualized. Data as of June 30, 2021.

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.

Effective July 14, 2021 Sun Life Excel India Fund was renamed Sun Life Aditya Birla India Fund.

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.

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