Sun Life Granite Target Date and Target Risk Funds – Change in U.S. Equities
Plan sponsors may wish to consider whether this investment news has any implications for the investment options available within their plans. Sun Life Assurance Company of Canada purchases units of the funds listed below, which are established as segregated funds in accordance with the Insurance Companies Act (Canada).
No action required
You don’t have to take any action because of the update below. Please review the details about the changes to the Sun Life Granite Target Date & Multi-Risk Target Date (“Granite TDFs”) and Sun Life Granite Target Risk Funds (“Granite TRFs”).
Sun Life Global Investments (“SLGI”) uses funds managed by various investment managers (“underlying funds”) to manage the Granite TDFs and Granite TRFs. SLGI regularly reviews both the strategic asset allocation and underlying funds to support long-term investment outcomes, given current market conditions and expectations. In July 2026, SLGI confirmed that they are not making changes to strategic asset allocation in the Granite funds this year. SLGI has made some changes to the underlying funds within U.S. equities, as described below.
Change in U.S Equities
SLGI is removing actively-managed funds and replacing them with passive (index) investments within U.S. Equities. The active U.S. Equity allocation is 25% for Granite TDFs and 33% for Granite TRFs. This was equivalent to between 3.0% to 8.5% of the overall Granite TDFs and between 4.0% to 10.0% of the overall Granite TRFs, varying by fund.
Specifically, SLGI is replacing Sun Life MFS U.S. Growth and Sun Life MFS U.S. Value funds with the Sun Life State Street U.S. Equity Index fund. SLGI recently replaced BlackRock with State Street as the passive manager, as communicated here.
While there will no longer be a strategic allocation to active U.S. equities, SLGI’s Multi-Asset Solution team (MAS) will manage a tactical allocation to U.S. equities for both the Granite TDFs and Granite TRFs through their sector rotation strategy. The MAS team designed the sector rotation strategy to capture shorter-term opportunities. The strategy tactically allocates to various U.S. industry sectors (through passive U.S. sector ETFs) in response to macroeconomic trends, market cycles, valuations and shifts in investor sentiment.
SLGI believes these changes will improve risk-adjusted returns. There are no changes to the Granite TDFs and Granite TRFs respective benchmarks or investment objectives as a result of these changes.
How will this affect your members?
As with any trading that SLGI does within Granite funds when they change the strategic allocations or underlying funds, these transactions may result in a taxable capital gain or loss for members invested in a Non-Registered plan.
Sun Life will provide the applicable tax slip(s) in early 2027. The tax slip(s) will reflect all income from your members’ Non-Registered investments.
For more information on how capital gains can occur in segregated funds within Non-Registered plans, please read the article here. Members can find their ACB on Plan Member Services website mysunlife.ca and selecting Check on Account > Balances.
GRS Investment Solutions View
SLGI uses a multi-manager approach for these funds and is expected to make changes to the underlying components from time to time. We are comfortable with the changes that SLGI have made to both Granite TDFs and Granite TRFs. Historically, active management in U.S. Equity has struggled to add value relative to indices like the S&P 500. SLGI has been allocating more active management to alternative asset classes recently, where there is an expectation for better risk-adjusted outcomes.
The tactical sector rotation strategy is new, and is uniquely managed by the internal SLGI MAS team, rather than by third party investment managers. However, SLGI has been using tactical management in Granite TDFs and Granite TRFs since their inception, so this is a new way of implementing tactical views, rather than a completely new approach. While it is not expected to have a significant impact on overall performance, we will be monitoring the strategy closely to assess its results. We will continue to monitor these changes over time and provide updates as necessary.
Questions?
Please contact your Sun Life Group Retirement Services Representative.