Sun Life Financial today introduced the Milestone series of segregated funds, the first lifecycle funds for employer-sponsored group retirement and savings plans in Canada to feature a guaranteed unit value at maturity.

Traditional lifecycle funds (also referred to as target date funds) have a set maturity date and dynamically change the asset mix for the fund, shifting from equities to fixed income, as the fund draws closer to maturity. The Milestone Funds enhance this concept by adding the unique feature of a guarantee available at fund maturity from one of the largest banks in the world, of the highest month-end unit value achieved over the life of a fund.

Seven funds will be offered with maturity dates of 2010, 2015, 2020, 2025, 2030, 2035 and 2040, meeting various investment time horizons.

“While traditional lifecycle funds aren’t new in Canada, the concept of a guaranteed maturity value is new for the group retirement services market, said Rick Headrick, assistant vp, investment services. “With the Milestone Funds, investors are guaranteed to receive at maturity an amount determined using at least the Funds’ inception unit price, or, if the fund reaches a higher month-end unit price over its lifetime, that higher unit price.”

“These funds help address a major challenge facing employers who offer retirement or savings plans to their employees – how to engage employees in a way that ensures they select a mix of investments that meet their risk tolerance now and then revisit and adjust that strategy as they get closer to retirement,” said Lori Bak, vp, client relationships and marketing.

The new funds help address this challenge by simplifying the decision process for the employee. Employees answer just one question upon enrolment in a company-sponsored retirement or savings plan that features the Milestone Funds: “When do you plan to retire?” or “When is your investment milestone?” (such as a large purchase or child’s education).

Sun Life says this straightforward approach is easy for employees to understand and therefore provides employers with the comfort of knowing that employees are invested in accordance with their wishes.

The firm adds that the new funds also encourage investors to remain invested and even invest further during down markets by clearly showing the benefit of holding to maturity to receive the guaranteed maturity value.

The funds are available exclusively in the Canadian group retirement market through Sun Life Assurance Co, of Canada.

The maturity value of the Milestone Funds is guaranteed by ABN AMRO Bank N.V., a leading international bank. The portfolio advisor to the funds is the Canadian subsidiary of ABN AMRO’s investment management company, ABN AMRO Asset Management, one of the world’s leading asset managers. Sun Life says ABN AMRO Asset Management pioneered this fund concept in Europe in 2000.