Sun Life MFS International Value Fund

Fund commentary | Q2 2023

Opinions and commentary provided by sub-advisor MFS Investment Management Canada Limited.

Market Review

Global equity markets continued to climb during the second quarter, as both growth and cyclical stocks gained. Industrials, supported by better-than-expected economic environment, was the best performing sector in the MSCI EAFE Index. Enthusiasm for artificial intelligence helped technology sector. Consumer discretionary stocks benefitted from a favourable economy, and financials advanced on rising interest rates. Defensive sectors such as communication services and consumer staples lagged. Materials lagged due to lower commodity prices and real estate was pressured by higher interest rates.

Japan was the best performing region in the MSCI EAFE Index. Corporate governance improvements and a shift away from deflation helped inflows. Continental Europe performed in line with the index average, but the U.K. lagged due to its concentration in materials and energy companies. Asia Pacific ex-Japan performed the worst due to its large exposure to the poorly-performing materials sector and concerns about a slowdown in China.

The Sun Life MFS International Value Fund (the “Fund”) outperformed the MSCI EAFE Index in the second quarter. Favourable relative returns from information technology (IT) and industrials offset disappointing performance in financials.

  • A combination of both stock selection and overweighting IT and Industrials sectors contributed to relative performance
  • The absence of exposure in the underperforming communication services aided relative returns
  • Stock selection in financials detracted relative performance
  • An underweight position in consumer discretionary detracted relative performance

Manager Outlook

The sub-advisor (MFS Investment Management) anticipates a challenging near-to-medium term, as the global economy feels the full impact of higher interest rates, higher energy costs and sticky inflation. Longer term, MFS believes that the global economy is unlikely to return to a scenario of low inflation, low interest rates and increasing globalization experienced between 2009 and 2021.

MFS is now more focused on valuation in their investment process. MFS is now invested in financials and energy sectors that it had underweighted in the past. MFS has trimmed higher-multiple holdings in consumer staples and IT sectors to fund newer ideas.

  • Schneider Electric SE –Overweight position in electrical distribution equipment manufacturer Schneider Electric (France) helped relative performance as quarterly sales beat expectations, costs were lower than expected and an outlook upgrade.
  • DISCO Corp. – Overweight position in precision machinery company DISCO (Japan) helped relative results thanks to better-than-expected sales to semiconductor manufacturers and currency tailwinds.
  • Petróleo Brasileiro S.A. – Oil and gas exploration and production firm Petróleo Brasileiro (Brazil) helped relative performance. Solid operational results, a robust dividend payout and a better-than-expected outlook helped performance.

  • Agilent Technologies Inc. – Life sciences and diagnostics firm Agilent Technologies (United States) hurt relative performance. The stock declined after Agilent revised its revenue and earnings guidance for fiscal year 2023 to reflect lower institutional demand.
  • Deutsche Börse AG – An overweight position in stock exchange Deutsche Börse (Germany) hurt relative performance. Despite solid first-quarter financial results, management's conservative guidance weighed on the stock.
  • HSBC Holdings PLC – Not owning shares of HSBC (United Kingdom) hurt relative performance. The stock advanced on strong financial results for the first quarter, robust revenue growth and net interest income.

Portfolio Activity


  • Initiated a position in Willis Towers Watson. MFS favours insurance brokers, due to their defensive GDP-plus growth rates, strong balance sheets and positive operating leverage. Larger brokers can benefit from scale benefits and their ability to provide comprehensive risk solutions.
  • Added Agilent Technologies, after the stock declined on broad-based industry weakness, due to reductions in biotech and pharma capital expenditures.
  • Added Haleon, a company with consumer health brands such as Advil, Sensodyne, Polident and Centrum. We expect higher profit margins and stock valuation.
  • Added to NatWest, the U.K.-based bank that has significantly de-levered and de-risked since the global financial crisis. We believe NatWest could benefit from rising interest rates.
  • Added to French consulting firm Capgemini, based on its strong position in Europe where it helps clients transition to the cloud and due to the stock’s reasonable valuation.
  • Added to Resona Holdings, the fifth largest bank in Japan. A conservatively managed, deposit-funded bank. MFS believes that Resona will benefit from rising interest rates.


  • Exited Reckitt Benckiser. Despite a 3-year turnaround program and relatively favourable industry dynamics in hygiene business and U.S. infant formula market, Reckitt has not shown a meaningful improvement in profit margins.
  • Trimmed Nestlé due to expensive valuation and to fund newer ideas.
  • Exited Kobayashi Pharmaceutical, as the valuation expanded on the back of good earnings numbers.

Fund Positioning

We remain defensively positioned. The portfolio is overweight IT, where the Fund owns niche and dominant computer software, systems and semiconductor companies with competitive advantages and differentiated intellectual property. The Fund is overweight consumer staples, favouring the brand name strength, global distribution networks and strong balance sheets. These include consumer product, food and alcoholic beverage companies that can adapt to the digital environment. The portfolio is overweight materials, where the Fund owns stocks that should provide a hedge against inflation. It also owns well-positioned specialty chemical companies and is overweight Industrials

The portfolio is underweight consumer discretionary, avoiding auto makers and most consumer cyclical stocks. The Fund is also underweight healthcare on concerns about drug pricing pressures and underweight communication services, where MFS has chosen to stay away from the debt-laden balance sheets and regulatory burden of the telecom companies.

Fund performance

Compound Returns %¹ Since Inception2 10 Year 5 Year 3 Year 1 Year Q2
Sun Life MFS International Value Fund - Series A







Sun Life MFS International Value Fund - Series F














¹Returns for periods longer than one year are annualized. Data as of June 30, 2023.

²Partial calendar year. Returns are for the period from the fund’s inception date of October 1, 2010 to December 31, 2010.

Views expressed are those of MFS Investment Management Canada Limited, 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 subject to change and 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.

MFS Investment Management Canada Limited is the sub-advisor to the Sun Life MFS Funds; SLGI Asset Management Inc. is the registered portfolio manager. MFS Investment Management Canada Limited has appointed MFS Institutional Advisors, Inc. to provide additional sub-advisory services.

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.