Sun Life launches new mutual fund company

Sun Life has announced it is entering the mutual fund business, based on the investment teams already in place at its U.S.-based asset manager, MFS Investment Management.

“We are expanding our wealth business in Canada by bringing more choices and innovative products to retail investors,” said Kevin Dougherty, president, Sun Life Financial Canada and president, Sun Life Global Investments. “Combined with our life insurance options, Sun Life is uniquely positioned to provide broad-based wealth management and protection solutions for Canadians through our trusted advisors.”

The new line-up of retail mutual funds will be rolled out this fall, and will be available through Sun Life’s own advisors, its wholesale distribution channel and its segregated fund platform for inclusion in group retirement plans.

Sun Life has $435 billion in assets under management across its operations and affiliated companies MFS, McLean Budden and Birla Sun Life Asset Management Company of India.

The number of mandates has not been announced, nor has Sun Life revealed which asset classes will be available. But the initial offerings will focus on the strengths of MFS in U.S., international and global research.

The exact roles to be played by McLean Budden and Birla Sun Life have not yet been disclosed.

“We are very excited to provide our advisors and clients access to MFS’ global investment research, product diversity and top-tier performance, as well as high-performance offerings from McLean Budden which in the past have been primarily accessible only to pension funds, endowments and high net worth investors,” Dougherty said.

Sun Life has been out of the mutual fund business since 2008, when it sold its 37% stake in CI Financial to Bank of Nova Scotia. Since then, Sun Life and CI have maintained a cozy relationship and the new fund line-up will not change that, according to Kevin Strain, senior vice-president, individual insurance and investments, Sun Life Financial Canada.

“We have a very strong relationship with CI, and that strong partnership is going to continue,” he says. “[Sun Life advisors’] access to CI’s funds and wholesalers, none of that changes.”

Through the economic and financial downturn, Sun Life was focused on risk management, concentrating on the pricing of its segregated funds for the risks they represented, according to Strain.

Coming out of the downturn, that focus shifted to expansion.

“A natural place for us to turn is mutual funds. They’re a really important part of the market and it was a place that we weren’t manufacturing product,” he says. “There’s been a huge lift in mutual fund sales this RRSP season, so it just made a lot of sense to enter back into that space.”

The Canadian mutual fund industry is fairly well saturated, but Strain says the Sun Life brand itself with help differentiate the new fund company. It was named in the World Economic Forum’s Global 100 most sustainable brands, and was recently named the most reputable financial services firm in a study by the Reputation Institute.

“We also have, of course, our Sun Life sales force, which is a key distribution strength for us,” he says. “Almost 90% of our advisors in the career sales force are mutual fund licenced. I think it’s probably underestimated how well we do on the fund side.”

The company has been promoting holistic financial planning among its career advisors, Strain says, and “the very best wealth advisors are also our very best insurance advisors.”

While the career shop will play a big part in the success of the new fund company, he says the company will work hard to inform independent advisors of the virtues of the new offering.

MFS launched the first mutual fund in 1924, and Strain points out the firm is a Lipper Leader for consistent return preservation. It has offices in 19 countries and 150 investment professionals on the ground.

“They have a very strong research platform, particularly for global and international [mandates], and that will be our focus in the first stages of this,” he says.

(05/13/10)