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. They are established as segregated funds under the Insurance Companies Act (Canada).
In late 2020, CI Investments Inc. announced it would integrate its in-house investment boutiques below into a single entity:
- Signature Global Asset Management
- Cambridge Global Asset Management
- Harbour Advisors
- Sentry Investment Management
- CI Multi-Asset Management
The new brand is CI Global Asset Management (CI GAM).
The primary reason for the integration is to use the investment talent and resources across the legacy boutiques that operated independently. The old operating structure was not optimal because there was little communication between the investment boutiques. In addition, there was significant duplication of responsibilities among the investment teams. CI GAM stated that the leaders of the legacy boutiques were all supportive of the move to the new structure.
As part of the integration, CI GAM has implemented the following changes:
- CI GAM created an Investment Management Committee (IMC) to oversee and manage the investment process and infrastructure. The IMC consists of:
- Chief Investment Officer (CIO) and senior portfolio managers of each legacy boutique.
- Kurt MacAlpine (Chief Executive Officer).
- Darie Urbanky (President and Chief Operating Officer).
There won’t be an overall CIO for CI GAM or a single macroeconomic in-house view. Despite the focus on collaboration, CI GAM intends to protect some of the unique and complementary aspects of each team’s investment process and style. The CIOs will continue to oversee their respective investment processes.
- CI GAM combined the analysts and sector portfolio managers from the legacy entities into one global research platform. CI GAM is grouping this platform by sectors and regions. The firm may reallocate some employees between sectors and regions to balance out the research coverage. The firm will move all investment teams onto the same floor when they reopen the office. In addition, they will also standardize reporting and centralize trading systems, investment analytics and research databases.
CI GAM expects to merge or close overlapping products. The investment teams will be in charge of continuing products viewed as best in each asset class. Despite the expected product consolidation, CI GAM is not planning any staffing reductions.
Sun Life’s GRS Investment Solutions team met with CI GAM to discuss these changes in early 2021. We believe the integration will benefit CI GAM in the long term. However, we expect significant impact over the short- and medium-term on both investment activities and operations.
- The changes in the research team coverage and structure may lead to temporary disruption. The analysts with new coverage need some time to develop expertise in new sectors or regions. They also need to build new relationships and collaborate with analysts from the other legacy boutiques.
- The centralization of trading systems, investment analytics and research databases may affect the investment process. The analysts and traders will need time to learn to use the new tools.
- Product consolidation may become a distraction to the portfolio management teams as CI GAM merges and closes funds. We may also see overall CI GAM assets stagnate or decline as investors evaluate alternatives.
- There may be growing pains as personalities and firm cultures mix. This will especially be present among the CIOs and senior portfolio managers in the IMC. Historically, they had full autonomy over investment activities and decisions in their respective boutiques. They may chafe against their fewer and, in some cases, narrower mandates. It would not be surprising to see an increase in key personnel turnover over the next couple of years.
We believe it will take several years to assess the success of the integration. We expect there may be more changes in upcoming quarters. As a result, we have put the segregated funds below under the “Additional Monitoring” category on our Watch List:
- CI Portfolio Series
- CI Signature Income & Growth
- CI Cambridge Asset Allocation
- CI Cambridge Canadian Equity
- CI Canadian Small/Mid Capi.
These changes also impact the CI Canadian Investment fund, sub-advised under the legacy brand Harbour Advisors. In 2019, we designated this fund as “Suggested for Removal” on our Watch List.
Please contact your Sun Life Group Retirement Services representative.
iSun Life no longer markets this segregated fund on the core investment platform.