SLC Management Canadian Long Duration Overlay Strategy
The investment objective is to seek to gain exposure to long-term government fixed income securities equal to three times the cash value of the strategy by investing primarily in long-term Canadian provincial fixed income securities and entering into repurchase agreements. The strategy may also from time to time invest in Canadian federal fixed income securities and enter into derivatives and reverse repurchase agreements.
The strategy is designed to provide a longer duration (approximately three times the FTSE Canada Long Term Provincial Bond Index) than can otherwise be achieved by investing solely in physical bonds. This may be attractive to institutional investors such as defined benefit pension plans, as it can provide an effective hedge for long-dated liabilities that are sensitive to change in long term interest rates. The investment strategy provides the ability to extend duration using both repos and interest rate swaps. Repo strategies can be complex to implement for certain mid-to-small institutional investors; the investment structure is potentially more attractive as it shifts this complexity onto the investment manager. Furthermore, SLC Management has extensive experience in the repo markets, running a repo program of approximately CA$2 billion overall.
Randall Malcolm, Senior Managing Director and Portfolio Manager, Canadian Total Return Public Fixed Income
Please note that Sun Life Capital Management (Canada) Inc. advises on this strategy. Sun Life Capital Management (Canada) Inc. is a Canadian registered portfolio manager, investment fund manager, exempt market dealer and in Ontario, a commodity trading manager.
Learn more about our solutions for institutional investors