Sun Life 2015 Annual Report Download - page 159

23. Segregated Funds
We have segregated fund products, including variable annuities and unit-linked products, within Canada, the U.S., the U.K., and Asia.
Under these contracts, the benefit amount is contractually linked to the fair value of the investments in the particular segregated fund.
Policyholders can select from a variety of categories of segregated fund investments. Although the underlying assets are registered in
our name and the segregated fund contract holder has no direct access to the specific assets, the contractual arrangements are such
that the segregated fund policyholder bears the risk and rewards of the funds’ investment performance. Therefore, net realized gains
and losses, other net investment income earned, and expenses incurred on the segregated funds are attributable to policyholders and
not to us. However, certain contracts include guarantees from us. We are exposed to equity market risk and interest rate risk as a
result of these guarantees. Further details on these guarantees and our risk management activities related to these guarantees are
included in the Risk Management section of the MD&A.
We derive fee income from segregated funds. Market value movements in the investments held for segregated fund holders impact the
management fees earned on these funds.
The segregated fund types offered, by percentage of total investments for account of segregated fund holders, was within the following
ranges as at December 31, 2015 and 2014:
Type of fund %
Money market 5to10
Fixed income 10 to 15
Balanced 40 to 45
Equity 40 to 45
Money market funds include investments that have a term to maturity of less than one year. Fixed income funds are funds that invest
primarily in investment grade fixed income securities and where less than 25% can be invested in diversified equities or high-yield
bonds. Balanced funds are a combination of fixed income securities with a larger equity component. The fixed income component is
greater than 25% of the portfolio. Equity consists primarily of broad-based diversified funds that invest in a well-diversified mix of
Canadian, U.S. or global equities. Other funds in this category include low volatility funds, intermediate volatility funds, and high
volatility funds.
23.A Investments for Account of Segregated Fund Holders
The carrying value of investments held for segregated fund holders are as follows:
As at December 31, 2015 2014
Segregated and mutual fund units $ 76,076 $ 69,402
Equity securities 11,169 10,600
Debt securities 3,217 3,050
Cash, cash equivalents and short-term securities 719 686
Investment properties 479 391
Mortgages 36 30
Other assets 152 99
Total assets $ 91,848 $ 84,258
Less: Liabilities arising from investing activities $ 408 $ 320
Total investments for account of segregated fund holders $ 91,440 $ 83,938
Notes to Consolidated Financial Statements Sun Life Financial Inc. Annual Report 2015 157