Sun Life abandons the ETF market, at least for now

Rudy Luukko 19 March, 2018 | 9:00PM

Less than three months after acquiring a mini-family of exchange-traded funds, Sun Life Global Investments (Canada) Inc. is abandoning the ETF market.

Sun Life Global announced today its intention to terminate Excel Global Balanced Asset Allocation (EXGB) and Excel Global Growth Asset Allocation (EXGG), effective at the close of business on May 30.

The two actively managed ETFs, each of which has a meagre $2 million in assets and negative investment returns, were launched in May 2017 by the formerly privately owned Excel Funds Management Inc. Sun Life Global, a subsidiary of  Sun Life Financial Inc. (SLF), completed the acquisition of Excel Funds and its in-house portfolio-manager Excel Investment Counsel Inc. on Jan. 2.

At the time of the acquisition, Sun Life Global's president Rick Headrick characterized the acquisition of Excel's ETF business as a positive development for investors. "By expanding our lineup of emerging-market funds and adding Excel's exchange-traded funds, clients will have more choices through which to achieve their financial goals," Headrick said in a Jan. 3 release.

Sun Life Global has now changed its tune. Alken Asset Management Ltd., the London-based portfolio manager for the Excel ETFs, will soon be let go, two months before the ETFs are terminated. Alken's sub-advisory contract is scheduled to be terminated, effective as of the close of business on March 27, with Excel Investment Counsel assuming a caretaker role.

May 24 is scheduled to be the last date on which redemption requests for the Excel ETFs may be placed, and they are to be de-listed from the Toronto Stock Exchange at the close of business on May 25. All units still held by investors after that date will be subject to a mandatory redemption as of the termination date.

As of Feb 28, both ETFs have been money-losers since their inception date. Excel Global Balanced Asset Allocation is down 2.2% and Excel Global Growth Asset Allocation has lost 3%.

Sun Life Global indicated that it intends to eventually re-enter the ETF market. "We see great opportunity in the ETF market but have made the decision to take a more measured approach to evaluating the launch of ETFs at Sun Life Global Investments to ensure we're bringing our clients the best solutions to help them reach their financial goals," Sadiq Adatia, Sun Life Global's chief investment officer, said in a release today.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Sun Life Financial Inc53.33 CAD0.98

About Author

Rudy Luukko

Rudy Luukko  Rudy Luukko is a freelance writer who contributes to Morningstar.ca on topics involving fund industry trends and regulatory issues. He retired in May 2018 from his position as editor, investment and personal finance, at Morningstar Canada, where he had worked since 2004. He has also worked as an editor and writer for various general, specialty and institutional media, and he has co-authored courses for the Canadian Securities Institute. Follow Rudy on Twitter: @RudyLuukko.