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Sun Life Excel India Fund

Fund commentary | Q4 2020

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Throughout the fourth quarter of 2020, macro indicators in India continued to improve, with indicators such as Goods and Services Tax collection and electricity consumption reaching pre-pandemic levels. These are considered strong indicators of overall economic activity, which buoyed market performance during the quarter. The discovery and approval of several COVID-19 vaccines in the fourth quarter resulted in investors flocking into risk assets, and emerging markets were a key beneficiary of this. As one of the largest emerging market countries, India saw significant inflows from foreign investors during the quarter.

India’s daily COVID-19 cases peaked in September at a seven-day moving average of approximately 93,000 cases per day. Cases have been consistently falling since, closing out the year around 20,000 cases per day. While number of new infections continues to decline, India’s economic re-opening has been gradual and partial shut downs are still in place. As a result, the strong economic indicators came as a surprise to the market. The portfolio manager believes this could translate into positive earnings surprises from Indian companies in the coming quarters, which would in turn make valuations in India more attractive. 

The portfolio manager believes there is potential for manufacturing in India to increase as global players look to diversify their manufacturing supply chains. Moreover, India’s large domestic market means companies may also look to develop local manufacturing to cater to the large consumer market. Additionally, the Indian government has reduced tax rates for companies that setup new manufacturing, dropping the rate to a very competitive level relative to other markets in Asia. The government also announced production-linked tax incentives to encourage existing manufacturing companies to ramp up production. With this in mind, the portfolio manager anticipates additional foreign direct investment into Indian manufacturing in the near future.

COMPOUND RETURNS %¹ SINCE INCEPTION² 10 YEAR 7 YEAR 5 YEAR 3 YEAR 1 YEAR Q4
Sun Life Excel India Fund - Series A 10.4 6.0 13.2 6.3 0.4 4.3 13.2
Sun Life Excel India Fund - Series F 9.0 7.2 14.4 7.5 1.6 5.5  
MSCI India Index 9.9 6.0 11.9 7,6 5.4 13.5 15.4

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: April 14, 1998 to December 31, 1998 and Series F: January 4, 2005 to December 31, 2005.

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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