Sun Life MFS International Value Fund

Fund commentary | Q4 2023

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

Market Review

Equity markets rallied in the fourth quarter (Q4), on increasing expectations for a soft landing and interest rate cuts starting sooner than previously anticipated. Rebounding from losses in the third quarter, the MSCI EAFE Index (C$) delivered a total return of 7.7% for the final quarter of the year. Procyclical areas of the market, including information technology, materials, real estate and industrials posted the strongest gains, while energy, consumer staples and consumer discretionary lagged the index average. Continental Europe was the best performing region, as the local economies held up better than many expected. Meanwhile Japan, with less central bank tailwinds, and the UK, weighed down by heavy exposure to energy and commodity companies, lagged the broader index.

Sun Life MFS International Value Fund (the “Fund”) underperformed the MSCI EAFE Index over Q4. Stock selection in financials and materials detracted from relative performance.

  • A combination of both stock selection and overweighting consumer staples, one of the weaker-performing sectors in the index, detracted from relative performance.
  • An overweight position in energy, one of the weaker-performing sectors in the index, also detracted from relative performance.
  • A combination of both stock selection and underweighting health care and consumer discretionary, two of the weaker-performing sectors in the index, contributed to relative performance.
  • A combination of both stock selection and overweighting industrials, one of the stronger-performing sectors in the index, contributed to relative performance.

Manager Outlook

2023 was a tumultuous year for equity markets. Investors came in bracing for a recession, then transitioned to growth in the summer, fueled by artificial intelligence excitement, higher-for-longer rates in the fall, increased confidence in a soft landing and interest rates cuts in Q4. During the year, there were sizeable bank failures in the U.S. and Switzerland, building pressures on Chinese real estate and tightening monetary conditions due to the lagged effects of interest rate hikes. The war in Ukraine continued and a growing crisis in the Middle East developed. With stocks priced for perfection, the sub-advisor MFS Investment Management (“MFS”) is cautious on the outlook for global equity markets.

Over the past year, MFS has increased select Fund investments in value-oriented areas such as financials and energy while reducing exposure to longer-duration and more expensive stocks, particularly in consumer staples and information technology. 

  • Franco-Nevada Corp. – The portfolio’s position in the gold-focused royalty and streaming company detracted from relative returns. The share price fell as it reported a lower-than-expected volume of mined materials and lowered guidance due to protest disruptions in its Panamanian operations.
  • Rohto Pharmaceutical Co. Ltd. – The portfolio’s position in the pharmaceutical manufacturing company hindered relative returns. Despite growing sales and improving margins, its share price fell as foreign exchange impacts dented total revenue.
  • Woodside Energy Group Ltd. – An overweight position in the petroleum exploration and production company detracted from relative performance. The stock price fell as it reported below-consensus revenue results due to lower-than-expected realized pricing.

  • Schneider Electric SE – An overweight position in the electrical distribution equipment manufacturer benefited relative performance. Shares rose as it reported stronger-than-expected organic sales growth in its energy management segment.
  • Toyo Suisan Kaisha, Ltd. – The portfolio's holdings of the food manufacturer benefited relative performance. Its quarterly operating profit results and profit guidance exceeded market expectations.
  • Samsung Electronics Co., Ltd. – Holding shares of the microchip and electronics manufacturer contributed to relative returns. The stock price advanced as it reported quarterly operating profit above market expectations, primarily due to solid results from smartphones and its display business.

Portfolio Activity

Portfolio activity over Q4 included:


  • Initiated a position in Aker BP, a Norwegian energy exploration and production company which benefits from some of the lowest operating expenses per barrel of oil equivalent globally (less than US$7 per barrel).
  • Starting a position in Olympus, a Japanese medical technology company specializing in microscopes, with a 70% worldwide market share in gastrointestinal flexible scopes. After a long history of poor corporate governance, Olympus has hired a Western operational management team, transformed its board and divested lower-margin non-core assets.
  • Initiating a position in Saint-Gobain, a European building materials company where MFS believes the portfolio transformation is resulting in a higher-quality, higher-margin, less-cyclical business.
  • Starting an investment in M3, the leading provider of online health care services in Japan. M3 has diversified through acquisitions with a core total addressable market still underpenetrated.
  • Adding to AIB Group, reflecting the undemanding valuations and gearing to higher interest rates.


  • Reducing the Fund’s investment in Nestlé given question marks around the quality and pricing power of the food category and the challenge of continuing to compound growth at a healthy rate given the size of the company.
  • Exiting Geberit where MFS has concerns about the Sanitec acquisition and the stock’s relatively high valuation.
  • Trimming Schneider Electric, L'Oréal, Ryanair, Givaudan, Disco and Legrand on strong relative performance and higher valuations

Fund Positioning

The Fund remains defensively positioned. The portfolio is overweight information technology, where the Fund owns computer software, systems and semiconductor companies that are dominant players in industry niches, with competitive advantages that MFS believes are supported by differentiated intellectual property. The Fund is overweight industrials, focusing on companies offering value-added and differentiated solutions to their customers. The portfolio is overweight materials, where the Fund owns stocks that should provide a hedge against inflation, in addition to several well-positioned specialty chemical companies.

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

MFS has been selectively increasing the Fund’s investments in financials such that the Fund’s exposure is now only slightly below that of its benchmark index. MFS remains cautious on the large European and Japanese banks in the index, with their complicated business models, investing instead in conservatively managed, predominantly retail banks in attractive banking markets.

Fund performance

Compound Returns %¹ Since Inception 10 Year 5 Year 3 Year 1 Year Q4
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 December 31, 2023.

Inception date September 30, 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.