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Exteriors of the Sun Life Financial office building at 150 King St. West photographed Feb. 24 2014. (Fred Lum/Fred Lum/The Globe and Mail)
Exteriors of the Sun Life Financial office building at 150 King St. West photographed Feb. 24 2014. (Fred Lum/Fred Lum/The Globe and Mail)

Sun Life targets wealthier investors with lower-fee funds Add to ...

Insurer Sun Life Financial Inc.’s wealth and asset management group is launching a new business targeting Canadian savers with more than $100,000 to invest.

Sun Life Global Investments (Canada) Inc.’s new business is called Private Client, and starting Tuesday it will offer access to lower-fee mutual fund series to investors who commit larger sums of money to the company’s portfolio of 53 funds.

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The move is aimed at targeting Canadian investors in the mid-market wealth range of $100,000 to $500,000. This segment is expected to account for 41 per cent of household growth between 2012 and 2022, according to figures from research group Investor Economics.

The mid-market’s pool of assets is set to grow to $642-billion by 2022, accounting for about 12 per cent of wealth. But this segment still has less investment power than the affluent Canadians in wealth categories above them. The research projects that by 2022, 82 per cent of wealth will fall to the 2.2 million Canadian households with at least $500,000 in wealth.

It can be trickier for those in the mid-market to access the lower-fee funds wealthy Canadians enjoy because these funds require high minimum investments.

Sun Life’s Private Client investments intend to compete with some of those more elite offerings, but in a way that allows investors to properly diversify their portfolios. Investors must invest a minimum of $100,000 to be considered a Private Client eligible for the series O and E mutual funds. But this initial investment can be spread as thin as investors choose, with a minimum investment of just $500 for each fund.

“A lot of those households are looking for preferred pricing,” said Cindy Crean, managing director of Sun Life Private Client. While competitors may offer investors pricing advantages at $100,000 the ability to diversify is unique to Sun Life. “Often there are $100,000 minimums per fund, but we don’t do that, so there’s the ability to build a portfolio even at that level,” she said.

The exact discounts on fund prices weren’t immediately available, but Sun Life said funds employ a tiered pricing system, so the more investors put in the funds, the lower the fees drop. Prices are reduced by 5 basis points at the $100,000 level, 10 basis points at the $250,000 level, 20 basis points at the $500,000 level, all the way up to 40 basis points at the $5-million level.

Ms. Crean said the other way Sun Life aims to differentiate itself is through the ability to “household.” This means families can link several individual accounts to Sun Life to make their combined investment pile larger, granting them access to those higher levels of preferred pricing.

“A lot of people have the wealth, but they may have it in several different accounts. I could have an RSP, my husband could have an RSP, and we might have some unregistered investments, education savings plans for the kids and TFSAs,” Ms. Crean said. “We’re offering the ability to ‘household’ your accounts and get the preferred pricing.”

Sun Life Global Investments has $7.7-billion in assets under management, but Ms. Crean said this is the company’s first effort to target these mass-affluent investors. “It’s a new market, and I think this is our next stage of growth,” she said.

Another draw to Private Client is that investors get more individual attention, with an annual in-depth portfolio review, investment rebalancing services and detailed reports and commentary each quarter.

This move comes as Sun Life is shaking up its asset management business in Canada. In February, the company added a new a new institutional-focused asset management business to attract defined-benefit pension plans, called Sun Life Investment Management Inc.

 

Editor's note: An earlier version of this story said the mid-market made up 41 per cent of Canadian households in 2012 and this group makes up the largest Investor Economics wealth category by volume. This has been corrected.

The former version also stated that of households with more than $1-million in assets make up 22 per cent of homes and control 74 per cent of the country’s financial wealth. This has been corrected.

Follow on Twitter: @j2nelson

 

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