MFS Investment Management addresses cross-generation retirement risk with new LifePlan Funds

TORONTO, Feb. 10, 2014 /CNW/ - MFS® Investment Management Canada Limited has announced changes to its Canadian MFS LifePlan Funds that address the dramatic shift in retirement planning that has occurred over the past decade. While traditional target-date funds base asset allocation decisions on factors such as the typical plan participant's age of retirement, life expectancy, savings and spending habits, the Canadian MFS LifePlan Funds take a different approach.

"We recognize that every investor has a unique set of investment objectives, and that their level of risk tolerance and their ability to withstand and recover from losses are time dependent," said Joe Flaherty, Chief Investment Risk Officer with MFS. "The Canadian LifePlan Funds take these factors into account rather than relying on a set of pre-determined assumptions that may not meet the retirement needs of most Canadians."

The new MFS LifePlan Funds employ a differentiated approach to asset allocation that aims to deliver performance consistent with investor expectations of generating growth early in their working lives and preserving capital as they age. These funds will invest in a diversified portfolio of actively-managed MFS Canadian equity, global equity, fixed income and real estate funds. The new LifePlan Funds, which will be managed by MFS' Quantitative Solutions team, will employ an investment approach focused on risk management with a bias towards what the management team believes to be high quality securities with attractive valuations.

Lessons Learned

The financial crisis of 2008-09, like so many recessions before it, demonstrated the necessity of global diversification. Canadian equity markets were hit hard during the collapse of the technology bubble in 2000-2002 and the recent global financial crisis, which broadly impacted the resource-heavy components of the TSX. For many baby boomers with high equity allocations in their retirement portfolios, these stock declines could not have come at a worse time. And for investors born between 1965 and 1984 - Generation X - the effects of these two recessions were just as pronounced. The new LifePlan Funds seek to reduce some of the risks associated with investing predominantly in home country assets.

Pros and Cons of a Home Country Bias

"Many Canadian investors have significant exposure to local equity markets," said Shawn Cohen, Director of Relationship Management with MFS. "For young and middle-aged investors, this home country bias can have a significant impact on retirement portfolios in the event of a local downturn, as we saw over the last decade. However, as an investor nears retirement, a home-country bias centered on fixed income can actually help limit short-term volatility, minimize currency risks and provide a steady income stream."

The new Canadian LifePlan Funds are designed to help ensure that investors remain globally diversified, especially early in their investment careers, to help dampen country-specific risk while taking advantage of a broader pool of global investments. As investors approach retirement, the fund adjusts, shifting to a greater weighting in Canadian fixed income investments, which are more suited to investors with a reduced investment timeframe who will draw on their savings in Canadian dollars.

The Canadian MFS LifePlan Funds Glidepath

The MFS LifePlan Funds use an enhanced glidepath that is steeper than most target date funds with a focus on capital appreciation early on, while maintaining a principal preservation strategy near and throughout retirement. The funds will maintain a 27 per cent equity weighting during the retirement stage with the goal of generating modest growth in retirement.

For more information on the MFS LifePlan Funds, please click here.

About MFS Investment Management

MFS is an active, global asset manager with investment offices in Boston, Hong Kong, London, Mexico City, São Paulo, Singapore, Sydney, Tokyo and Toronto. We employ a uniquely collaborative approach to build better insights for our clients. Our investment approach has three core elements of integrated research, global collaboration and active risk management. Established in 1924, MFS manages CAD $438.6 billion in assets on behalf of individual and institutional investors worldwide, as of December 31, 2013. Please visit for more information.

Important Risk Considerations

The funds may not achieve their objectives. You may experience losses near, at or after the target date. There is no guarantee that the funds will provide adequate income at and through your retirement.  MFS' strategy of investing in underlying funds exposes the fund to the risks of the underlying funds. The value of these investments will change from day to day, reflecting changes in interest rates, economic conditions, and market and issuer news. As a result, the value of a Fund's units may go up and down, and the value of a unit holder's investment in a Fund may be more or less when redeemed than when purchased. The risks associated with investing in a Fund are the risks associated with the securities in which the Fund invests. Pooled fund investors please refer the Pooled Fund Offering Memorandum for a summary of various types of investment risk that may be applicable to a Fund or a portion of a Fund and to the Methods of Analysis, Investment Strategies and Risk of Loss section of your investment management agreement.

Unless otherwise indicated, logos, product and service names are trademarks of MFS and its affiliates and may be registered in certain countries.

MFS Investment Management Canada Limited is registered as a portfolio manager in all provinces and territories of Canada, with its chief regulator being the Ontario Securities Commission (OSC).

Image with caption: "Exhibit 1: Evolving glide path objectives (CNW Group/MFS Investment Management Canada Limited)". Image available at:

SOURCE: MFS Investment Management Canada Limited

For further information:

Pat Jordan, 416.645.8207
James Aber, 617.954.6154

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