TDAM Active Canadian Corporate Bond Fund Investment Guidelines Updates

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 fund listed below. They are established as a segregated fund under the Insurance Companies Act (Canada).

Plan sponsors don’t need to take any immediate action as a result of this update.

TD Asset Management (TDAM) recently made changes to the investment guidelines of the TD Emerald Active Canadian Corporate Bond Pooled Fund Trust, which is the underlying fund for TDAM Active Canadian Corporate Bond Segregated Fund (the Fund).

TDAM stated that the updated investment guidelines were revised to allow for greater diversification by enhancing both sector and issuer diversification.

The outlined changes detail adjustments to allocations of foreign-issued debt and BBB rated bonds:

• Allocation to non-Canadian dollar denominated bonds: The changes increase the maximum exposure to non-Canadian dollar denominated bonds from 10% to 25%. The Fund’s foreign currency exposure will continue to be hedged; the maximum net foreign currency exposure remains unchanged at 10%.
• Allocation to BBB rated funds: The update increases the maximum allowable weighting for "BBB" rated bonds to 70%, up from the previous 50% limit.  

About the TDAM Active Canadian Corporate Bond Fund

The Fund invests primarily in Canadian dollar-denominated, investment-grade corporate debt instruments, while maintaining an overall focus on principal protection. The Fund seeks to maintain duration of +/- 30% of the benchmark’s duration. The benchmark is the FTSE Canada All Corporate Bond Index.

Sun Life GRS Investment Solutions team view

We have no concerns with the changes as they seem sensible due to changing market conditions.

A copy of the updated Investment Guidelines is available on Sun Life’s Plan Sponsor Services website at sunlife.ca/sponsor.  When logged into the website, under the Administration and reporting tab, choose Group Retirement Services. Then, on the top navigation menu, choose Investments >> Governance reports.