my money
At a Glance
Helping You Understand Financial Planning and Investments
Questions & Answers on Investments
Why can’t I find my funds in the newspaper or
on other websites?
What is the best
investment for me?
The funds offered through Sun Life Financial are pooled funds (segregated
funds) offered only to group savings plans such as Registered Pension
Plans or Group RRSPs. These funds are institutional funds and are not
listed in daily newspapers or on other financial Web sites. The funds that
are listed are mutual funds offered to the individual investor.
The best investment for an individual is determined by their
financial goals, time horizon
(number of years until they plan
to use the money), and risk tolerance. Unfortunately, there is no
magic formula for picking your
investments. Various investments
perform differently in the market;
this is either suitable or not
depending on the investor’s risk
tolerance.
Sun Life Financial’s Plan Member Services website, provides rates and
values details, as well links to the fund managers’ quarterly investment
reports.
I’ve noticed my account dropping in value over
the last few months. Should I move my money?
A drop in market value does not equate to a loss in dollar terms.
Market-based funds will fluctuate in value based on stock market
performance, and a change in interest rates. You ‘lock in’ a loss when
you move your money between funds. This is because we must sell
units that you hold in a given fund in order to buy units in the funds
that you wish to transfer your money to. If you transfer money from
a fund that has dropped in value, chances are that they will be selling
units at lower unit value than the value at which these units were
purchased. This creates a loss.
We recommend you choose funds based on your investment objectives
and risk tolerance and remain invested through market fluctuations.
Consider changing your portfolio when your personal situation
changes, as opposed to short-term market fluctuations.
This information is provided to the Research Pension Plan Members from the Research Pension
Plan Committee as part of the ongoing information and communication strategy.
This document and future communications are available online at: www.usask.ca/fsd/pensions
For example, an investor with less than
five years until they need the money is
likely looking for stability and capital
preservation of their existing assets.
This investor could select fixed income
securities or money market funds –
funds that will offer some a positive
return and the least possibility for a negative one. A bond fund is not the “best”
investment for an investor looking to
retire in 2030 and wanting his capital to
grow at a pace faster than inflation. It’s
important to set a financial goal for yourself and use various funds to achieve it,
whether you are 25 or 55.
Continued
What kind of fund will
provide safety and a
high rate of return?
The return you earn on your
money is positively linked to
the amount of risk you’re willing
to take.
For example, if you are currently invested
in guaranteed interest-rate accounts,
expect a 3-5% return per year. If you
want a higher return, you may look at
equities, but expect ranges to fluctuate in
the short term. The higher return you
desire, the more volatility you must be
willing to accept. This means short-term
changes in the funds unit value. The key
is to focus on a realistic return based on
the amount of risk you are willing to accept.
What is a balanced fund?
A balanced fund is sometimes called a diversified fund, and holds
segments from the main types of asset classes. This means within a
balanced fund, you’ll find Canadian equities, American equities,
International equities, as well as bonds and money market instruments.
Its success comes from diversifying itself among these asset classes, and
reducing the risk of the overall portfolio. The investment manager
actively manages the asset classes and re-balances them according to
market conditions. This allows the investor to “leave it to the experts”
in terms of their money management. A balanced fund is deemed
a moderate risk investment.
What is an index fund?
This is a “passively” managed fund. In other words, the fund manager
does not research and analyze individual stocks before selecting them
as investments in the fund. The fund is made up of all the stocks and
bonds that are included in the underlying index (like the Toronto Stock
Exchange (TSX)). It holds the stocks or bonds in the same weighting as
the underlying index, and closely matches the performance of the index
or indices that it tracks. Index funds don’t try to “beat the market”.
How many funds should
I hold in my portfolio?
You’ll first need to decide what
your time horizon (number of
years to retirement) looks like
and how comfortable you are
with risk. Next, you’ll need to
decide what percentage of your
money you’d like to invest in
various risk categories, such as
guaranteed interest accounts;
fixed income; and equities.
Depending on your profile, you
may want to consider including
funds in the various asset classes
that have different management
styles and offer geographic diversity.
i
What’s the difference between a segregated fund
and a mutual fund?
Segregated funds are governed by the Insurance Act of Canada, while
mutual funds are governed by the securities act of various provinces
through their securities commissions. Like a mutual fund, a segregated
fund is a pool of money contributed by many investors and invested
on their behalf by a professional money manager. Unlike individual
mutual funds, they can only be sold by insurance companies.
Segregated fund returns are not published in the public media reports.
The underlying individual mutual funds do however report their unit values
in newspapers, but don’t have the same unit values as the equivalent
segregated funds offered by Sun Life Financial. Administrative fees on
segregated funds are typically lower that fees on mutual funds. This is
due to lower costs associated with administering these funds.
If you would like to see the unit values of your funds, sign into
www.sunlife.ca/member.
If you have a general question or suggestion about this newsletter, please send an e-mail to can_pencontrol@sunlife.com or write to my money
At a Glance Newsletter, Group Retirement Services Marketing, Sun Life Financial, 225 King Street West, Toronto, ON M5V 3C5.
This bulletin has been created exclusively for you. It addresses issues to help you with your financial planning and investments, and cannot be
reproduced in whole or in part without the express permission of Sun Life Financial.