Sun Life KBI Global Dividend Private Pool

Fund commentary | Q3 2021

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Opinions and commentary by KBI Global Investments.

Market Review

During the quarter there was a reversal of the reopening, reflation and rotation trend that had prevailed in equity markets since vaccines were first rolled out last November. This was driven by disruption to economic activity, as the Delta variant of COVID-19 spread, and the pandemic resurged in many areas. With cyclical recovery stalled, growth outperformed value over the quarter. Heightened inflation worries near the end of the quarter gave a boost to more rate-sensitive value stocks in September. Overall, global equity markets finished broadly unchanged in U.S. dollar terms during the quarter.   

Portfolio Review

The Fund underperformed the benchmark during the quarter, although it rallied with a strong relative performance in September. Despite the subdued market environment year to date, investors have earned double-digit returns, and the Fund’s strategy continues to hold in strong relative performance to the benchmark. The Fund selects stocks with strong fundamentals that deserve to be trading on higher share prices regardless of the industry group that they belong to.

Market Outlook

With inflation or rising yields being deemed a risk to markets, this environment is expected to suit the Fund’s investment approach well. Stocks whose performance is negatively correlated to yields are trading at substantial premiums, while those with performance that is positively correlated are trading on substantial discounts. Given KBI’s extensive research on equity performance and dividend-oriented investment strategies during periods of inflation and rising yields the team recommends maximizing exposure to dividend growth and avoiding stocks with high valuation multiples. Stocks with relative performance records that have a positive relationship with rising rates should outperform those that have benefitted from falling rates.

Sun Life Global Dividend Private Pool Monthly snapshot:

Series A Series F

Views expressed are those of KBI Global Investors, 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.

© 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.