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 Schroder Emerging Markets Fund

Fund commentary | Q1 2022

Opinions and commentary provided by Schroder Investment Management.

Emerging markets (EM) returns were negative in Q1 2022, with Sun Life Schroder Emerging Markets Fund underperforming the index. Both country allocation and stock selection were negative.

At a country level, exposure to Russia, China, and Egypt underperformed. Following Russia’s invasion of Ukraine, Schroders valued all Russian equity holdings at an effective price of zero on March 3, 2022, and MSCI did so on March 9, 2022. As a result, Russian allocation hurt the fund’s performance. Additionally, China lagged as COVID-19 induced lockdowns and regulatory concerns relating to U.S.-listed Chinese stocks negatively impacted performance.

Underweighting Saudi Arabia and India also hurt the fund’s performance. Saudi Arabia, a major oil exporter, outperformed as oil prices rallied. The Indian market was driven higher by demand from domestic investors. These effects offset the fund’s gains from overweighting Brazil and South Africa that benefitted from a broad-based rally in commodities.

Stock selection in China was negative with an overweight position in Great Wall Motor and an underweight position in China Construction Bank. Great Wall Motor, an automobile manufacturer, underperformed as supply chain and cost issues pressured the firm.  China Construction Bank rose in Q1 as the banking sector outlook turned positive with the government announcing measures to boost the economy.

In Taiwan, an overweight position in chipmaker Mediatek and network equipment maker Accton Technology, negatively impacted stock selection. Both Mediatek, and Accton fell in Q1 on concerns about growth prospects in the wake of weaker global consumption.

In South Africa, an underweight position in the multinational holding firm, Naspers and overweight positions in financial services firm FirstRand and mining firm Gold Fields positively impacted stock selection. Naspers struggled as one of its holding companies, Tencent, posted poor results. FirstRand was helped by a rebound in South Africa’s financial sector and Gold Fields performance was helped by rising price of gold. 

In South Korea, an overweight position in Korea Zinc and participation in the LG Energy Solutions IPO positively impacted stock selection. The performance of both Korea Zinc and LG Energy Solutions benefitted from the electric vehicle boom.

Fund performance

Compound returns %1 Since inception2 10 year 7 year 5 year 3 year 1 year Q1
Sun Life Schroder Emerging Markets Fund - Series A 1.4 2.5 3.6 3.8 1.9 -17.6 -9.4
Sun Life Schroder Emerging Markets Fund - Series F 2.4 3.6 4.8 4.9 3.0 -16.7 -9.1
MSCI Emerging Markets Index 5.7 5.7 4.5 4.6 2.6 -11.9 -8.0

¹Returns for periods longer than one year are annualized. Data as of March 31, 2022.

²Partial calendar year. Returns are for the period from the fund’s inception date of September 1, 2011 to December 31, 2011.

Views expressed are those of Schroder Investment Management North America Inc., sub-advisor to select Sun Life mutual funds for which SLGI Asset Management Inc. acts as portfolio manager. 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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