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ETFs Sun Life Global Investments exploring best potential approach to enter ETF market

Sadiq Adatia, chief investment officer at Sun Life Global Investments.

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Sun Life Global Investments (Canada) Inc. will not yet be jumping back into the Canadian exchange-traded funds industry with proprietary products, opting to launch actively-managed mutual funds that incorporate ETFs into their holdings.

Sun Life Global Investments, the mutual fund division of parent firm Sun Life Financial Inc., announced the launch of Sun Life Tactical ETF portfolios, a set of five new mutual-fund portfolios that invest in underlying ETFs, and other mutual funds.

The portfolios are actively managed by Sun Life Global Investments’ portfolio management team and include mandates in fixed income, conservative, balanced, growth and equity. Management fees range between 0.95 per cent and 1.55 per cent. The portfolios will include U.S.-listed ETFs from Vanguard, iShares, State Street Global Advisors, Charles Schwab and VanEck.

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“ETFs have become increasingly popular with Canadians as a way to invest and clients were asking for ETF exposure as well as a product that was low cost," said Sadiq Adatia, chief investment officer at Sun Life Global Investments in an interview.

“We wanted to create what clients were looking for but in a similar fashion to what we are already doing.”

Earlier this year, Sun Life exited the ETF industry after closing down the its $4-million ETF business it had acquired in 2017 when it purchased all of the outstanding shares of both Excel Funds Management Inc. and Excel Investment Counsel Inc.,

At the time, Mr. Adatia told The Globe and Mail the exit from the ETF industry was only temporary as the firm continued to “assess the ETF market and explore the best potential approach for entering the ETF space.”

Mr. Sadiq says the firm has still not decided whether it will launch an in-house ETF division in the future.

“In terms of what we would offer to clients in an ETF wrapper is something we still have in our product pipeline and we are still going through work in that area,” said Mr. Sadiq.

Unlike many of its competitors in the mutual fund space who have added ETF segments to their asset management divisions, Sun Life Global Investments - which has $23-billion in assets under management (AUM) - remains on the sidelines after holding ETF assets in the Excel fund family for less than a year.

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At the time of the Excel acquisition, Rick Headrick, president of Sun Life Global Investments, told The Globe and Mail that the ETF side of the Excel business was not the primary driver of the acquisition as the discussions between the two companies had started well before Excel entered the ETF market.

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