The new asset management business of Sun Life Financial Inc. will open three pooled funds targeting institutional investors next week, and investors should expect a smaller version of the Canadian insurer's own portfolio.
Sun Life Investment Management Inc. has seeded the private debt, real estate and commercial mortgage funds with about $650-million. But that investment isn't cash – Sun Life has moved assets from its parent company into the funds to recreate its investment strategy.
"We wanted to make sure we put a meaningful amount of money in the fund to make a real commitment," said Steve Peacher, Sun Life Financial's chief investment officer. "Secondly, we wanted to have a reasonably diversified portfolio out of the gates."
For example, in the $300-million real estate fund, Sun life has put the ownership interests in 26 commercial buildings into the portfolio. And in the $200-million commercial mortgage fund, Mr. Peacher said there were 38 existing loans that had been sitting on Sun Life's balance sheet that they have now moved into the fund.
To decide which assets on Sun Life's $100-billion balance sheet to move, Mr. Peacher said his team focused on choosing "representative investments" that took into account all of the different long-term liabilities of the parent company.
He thinks the strategy will appeal to defined benefit plans and other institutional investors because they will be investing in a real portfolio right out of the gates, and will get a clear idea of the transactions and investments that can be expected in the future.