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Sun Life Excel Emerging Markets Fund

Fund commentary | Q4 2020

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Opinions and commentary provided by Schroder Investment Management.

Overall, emerging markets (EM) delivered positive returns in the fourth quarter and the Sun Life Excel Emerging Markets Fund outperformed its index. Country allocation and stock selection were both positive.

Country allocation bolstered fund performance. Overweight positions to Korea and Brazil, both of which outperformed, contributed to returns. Korea advanced amid a rebound in global growth, with strong performance from IT stocks supporting gains. Brazil outperformed as macroeconomic data reflected ongoing economic recovery.

A zero-weight to Saudi Arabia and underweight to China, both of which underperformed also contributed to performance. In Saudi Arabia, valuations were elevated going into the quarter and recorded a positive return overall, but still underperformed by a wide margin. China also underperformed, in part due to a rotation in leadership following strong year-to-date performance. However, the launch of an anti-trust investigation into Alibaba, a broader anti-trust program focused on the internet sector and further escalation in U.S.-China tensions dragged on sentiment. Cash holdings in a rising market detracted from relative performance.

Stock selection was positive overall, notably in Taiwan, Korea and South Africa. In Taiwan, an overweight to Delta Electronics contributed to returns. The electronics manufacturer’s stock rose after reporting strong sales figures from increased demand driven by the ongoing work from home trend. Additionally, Delta benefitted from its small but fast-growing exposure to electric vehicles. In Korea, an overweight position in Samsung Electronics bolstered returns. The IT heavyweight profited from hopes for a pick up in the dynamic RAM memory cycle in 2021. Stock selection in South Africa benefitted from an overweight to precious metal miner, Impala Platinum, as the company’s stock rose alongside an increase in spot prices.

Stock selection in China and Brazil detracted from returns. In China, an overweight to Alibaba and an underweight to Pinduoduo negatively impacted returns. Alibaba stock fell after a suspension of the Ant Financial IPO and concerns over stricter regulations for Fintech and platform businesses. Pinduoduo, an agriculture-focused technology platform connecting farmers and distributors with consumers, posted quarterly results above expectations with strong growth in gross merchandise value. The company has continued to show strong revenue growth, gaining market share within a growing e-commerce market. In Brazil, an underweight to Petrobras, a state-owned energy company, negatively impacted performance after the company’s stock was aided by a recovery in crude oil prices and a rising Brazilian Real, given its primarily USD denominated debt.

Fund performance

Compound returns %1 Since inception2 7 year 5 year 3 year 1 year Q4
Sun Life Excel Emerging Markets Fund - Series A 3.5 8.2 10.7 7.2 18.7 15.6
Sun Life Excel Emerging Markets Fund - Series F 4.6 9.4 11.9 8.3 20.1 15.9
MSCI Emerging Markets Index 7.9 9.0 10.9 6.8 16.2 14.2

1Returns for periods longer than one year are annualized. Data as of December 31, 2020

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.

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. SLGI Asset Management Inc. is the investment manager of the Sun Life Mutual Funds, Sun Life Granite Managed Solutions and Sun Life Private Investment Pools. 

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