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As of July 20, 2020, Sun Life Global Investments (Canada) Inc. changed its name to SLGI Asset Management Inc. It will take some time to update our websites, materials and forms and until that is complete, all references to Sun Life Global Investments (Canada) Inc. will mean SLGI Asset Management Inc. We’ve also brought together Sun Life mutual fund, segregated fund, annuity and guaranteed investment product businesses under the collective brand of Sun Life Global Investments.

Sun Life Excel High Income Fund

Fund commentary | Q4 2020

Opinions and commentary provided by Amundi Asset Management.

Market overview

The fourth quarter of 2020 kicked off with an eventful start in October. The European SURE loan program to help reduce risks of unemployment in the face of the COVID-19 crisis was seen as a success. And with high demand from eligible countries, the European Central Bank announced that further measures of support could be expected. In the U.S., talks over an additional fiscal stimulus package were suspended to be resumed after the elections. The stimulus package was ultimately passed and the Democrats won the election.

Emerging markets (EM) during this eventful quarter performed strongly with few surprises. November was a positive month as risk assets enjoyed strong performance following the risk-on sentiment from the positive sentiment from the U.S. election results and soon-to-come COVID-19 vaccines. The bullish sentiment continued through December. 

Quarterly performance analysis

The fourth quarter of 2020 kicked off with an eventful start in October. The European SURE loan program to help reduce risks of unemployment in the face of the COVID-19 crisis was seen as a success. And with high demand from eligible countries, the European Central Bank announced that further measures of support could be expected. In the U.S., talks over an additional fiscal stimulus package were suspended to be resumed after the elections. The stimulus package was ultimately passed and the Democrats won the election.

Within hard currency positioning, the Fund maintained its skew towards high yield during the quarter. The portfolio manager believes spreads on investment grade credit are tight and not far off from their pre-COVID-19 levels and therefore saw better risk-reward potential in high yield. The Fund maintained an overweight in Argentina on quasi-sovereigns in Mexico and Brazil and sovereign debt in the Dominican Republic.

On local currency, after the U.S. presidential elections, the Fund maintained its long position on Russian rates, whilst enhancing its overweight on South Africa, Mexico, Colombia and Brazil (front-end) rates.

On EM foreign exchange, the Fund took a tactical short on Turkish Lira (TRY) in November but closed out the year with a long position on the currency following the country’s monetary policy improvements. The Fund added to its overweight position on the Brazilian Real (BRL) and enhanced its short on the Chilean Peso (CLP) given the country’s limited room for monetary easing. Finally, the Fund maintained its overweight on Russian Ruble (RUB) and the Romanian Leu (RON) over the period.

Fund performance

Compound returns %1 Since inception2 10 years 7 year 5 year 3 year 1 year Q4
Sun Life Excel High Income Fund - Series A 5.0     5.4 4.9 3.1 1.9 0.9 4.4
Sun Life Excel High Income Fund - Series F 6.1 6.5 6.0 4.2 2.9 1.9 4.6
Benchmark* 5.8 6.4 6.4 5.0 4.6 2.5 2.3

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 Series A: October 22, 2010 to December 31, 2010 and Series F: November 4, 2010 to December 31, 2010.

*Benchmark: 50% JP Morgan GBI-EM Global Diversified Composite Unhedged Index; 50% JP Morgan EMBI Global Diversified Composite Index.

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. 

© SLGI Asset Management Inc. and its licensors, 2021. SLGI Asset Management Inc. is a member of the Sun Life group of companies. All rights reserved.