Sun Life Real Assets Private Pool

After a pullback in the early months of Q3 2024 (Q3), global equity markets rallied and ended the quarter with solid returns. There was a rotation in leadership from growth to value sectors and from larger-cap to small-cap and mid-cap companies. Both sector leadership and earnings growth broadened beyond the narrow group of big technology companies. Real assets posted positive performance and led broader equity markets, including U.S. markets.                                 

The Sun Life Real Assets Private Pool - Series F (“the Fund”) returned +10.5% in Q3. While the global natural resources and infrastructure components outperformed their benchmarks, the global real estate component lagged.                                           

In terms of relative positioning, the Fund maintains a tilt towards global natural resources to take advantage of the secular tailwinds driving clean energy and environmental sustainability, which are the focus of government spending plans and new regulation around the world. The Fund remains modestly underweight in global real estate investment trusts (REITs).                                    

The infrastructure component of the Fund outperformed the S&P Global Infrastructure Index by 74 basis points (bps) during Q3. The strategy doesn’t invest in energy and remains biased towards Europe where valuations are more favourable. Stock selection contributed to performance as positions in railways and UK utilities helped performance. A renewable power holding and an underweight position to U.S. utilities detracted from performance.                                         

The real estate component of the Fund underperformed the FTSE EPRA/NAREIT Developed Index by 220 bps. A sector underweight and negative stock selection in specialized, retail and healthcare REITs detracted from performance. Stock selection in hotel & resort and multi-residential REITs helped performance. The strategy continues to favour apartments, manufactured homes, self-storage and industrial properties as well as strip malls anchored by groceries.                                     

The natural resources component outperformed the broader S&P Global Natural Resource Index by 5.7%. An overweight position in utilities and industrials sectors and an underweight in the traditional energy sector, in which the Fund does not hold oil and gas-related companies, contributed meaningfully to relative performance. Not owning precious metals was the main detractor during Q3.             

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.

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.