Sun Life Expands Core Fixed Income01.30.2015
Sun Life Investment Management, the asset management business of Sun Life Financial, is expanding beyond its base in Canada with its acquisition of New York-based Ryan Labs Asset Management, which specializes in liability driven investing and total-return fixed income strategies.
“We want Sun Life Investment Management to be a North American manager that can provide fixed income solutions to institutions that are investing to meet liability streams,” Steve Peacher, president of Sun Life Investment Management and CIO of Sun Life Financial, told Markets Media.
Ryan Labs, an investment grade, core fixed income manager, manages about $5 billion for large institutions such as pensions, insurance companies, and endowments.
“We’re a bottoms-up type manager,” said Sean McShea, president of Ryan Labs. “We focus on the fundamentals, and we add a macro overlay in terms of where trends are in the business. Because we’re not too large, we can extract some type of risk premium from the capital markets, where some of our competitors can’t. Our business premise is that we add value through issue selection and sector rotation.”
The Sun Life acquisition will enable Ryan Labs to expand its LDI business. “We think that this will accelerate our growth,” said McShea. “When you’re speaking with prospective clients and consultants, they want to make sure there’s no business risk. This transaction helps alleviate any business risk issues when we’re going to call on a larger assignment.”
Ryan Labs has a core fixed income mutual fund that it allocates for portfolios between one and ten million dollars. Most of its separate account business is for portfolios greater than $10 million. It uses ETFs to “get portfolios allocated quickly, so we might use a fixed income ETF if we want to get the exposure done overnight, and then sell off the ETF as the portfolio gets invested,” said McShea.
Sun Life Investment Management has two main objectives, Peacher said. One is to bring customized liability-driven investment portfolios to help pension funds better match portfolios to liabilities. The second is to provide access to asset classes that have been used by Sun Life for many years but are hard for pension funds to access, such as private fixed income markets, commercial mortgages, and real estate.
“We want to be able to increasingly bring fixed income asset classes to clients that not everybody else can bring,” he said. “We want to be able to offer not only portfolios invested in the public fixed income markets but supplement those with fixed income markets outside of the public markets. We can offer some of those asset classes out of Sun Life today, but would love to expand the menu.”
Because Sun Life Financial has such a strong brand presence in Canada, it was able to launch Sun Life Investment Management in 2014 “organically and get traction right out of the gate,” said Peacher.
While Sun Life Financial has been operating in the U.S. for decades, the U.S. market was considered too large to grow the asset management business organically, so instead it chose the acquisition route. “Ryan Labs is a great fixed income manager,” Peacher said. “They have a particular expertise in liability-driven investing and customizing portfolios for their institutional clients. For us it was a perfect way to extend into the U.S. what we had started in Canada.”
As for future acquisitions, Peacher said, ‘if we see an acquisition that we think would fit and would enhance the capabilities and the solutions that we could bring to institutional investors in a fixed income portfolio, we’ll look at it.”
Feature image via V
Justin Chapman will lead the Digital Assets and Financial Markets group.
BNP Paribas Asset Management launched its first European ESG ETF Barometer survey.
By Greta Zhou and Andy Cheung, APAC AES, Credit Suisse
The ETF provides a way for investors to potentially profit from a decline in the price of bitcoin.
With Julien Messias, Founder, Head of Research & Development, Quantology Capital Management