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 Global Tactical Yield Private Pool

Fund commentary | Q3 2021

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Opinions and commentary by Sun Life Global Investments.

Markets rallied throughout the spring and summer, with the S&P 500 ending August up 20% year to date. Positive tailwinds include key interest rates remaining effectively at zero, more fiscal stimulus expected in the U.S. and earnings growth remained solid. But in the final weeks of Q3, cracks were starting to show. Economic growth, hampered by the Delta variant slowed, potentially eroding corporate profits. Inflation was running at its highest rate in years; valuations were stretched and internecine political battles in Washington may reduce the potential size of further stimulus. With all that weighing on the market, the S&P 500 ended September down 4.8% - its worst monthly performance since the market hit bottom in March 2020.

Overriding all these concerns, was the question of when the U.S. Federal Reserve would begin raising interest rates. And the market got at least part of the answer to that question shortly after quarter end, when the minutes of the Fed’s September meeting were released. They suggested that the Fed could begin tapering its US150-billion-a-month, bond-buying program in mid-November. This could potentially lift interest rates on longer-dated debt.

All these risks have backed into our risk/return equation. However, while we expect ongoing interest rate and pandemic concerns to hinder the market, the outlook could improve toward year-end. For one, the massive amount of fiscal COVID-related stimulus (estimated at US$20 trillion worldwide) continues to support economic growth. And we could yet see a Congressional agreement on the passage of a $US1 trillion infrastructure bill. However, a separate $3 trillion budget bill, may be reduced, if it passes at all.

During the third quarter, the Sun Life Global Tactical Yield Pool remained positioned with a preference towards more cyclically exposed segments of the equity market. We maintained an overweight position in Global Equities, at 53% of the portfolio. A relative underweight to fixed income continues to be supported by our expectation that yields could face further pressure to the upside. Within the bond component of the Pool, we continued to maximize our allocation to alternative fixed income to take advantage of ongoing opportunities within global credit markets.

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.