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What do you mean by "purchase" or "sell" ?
We use the terms “purchase” or “sell” in relation to units to describe the consequences of the following transactions:
- transfer of assets between funds
- investment of contributions to the plan
- a withdrawal
- systematic assets reallocation
- lifecycle movement
In fact, you do not own any unit under the policy. When such transactions are made, no units are purchased or sold. It is Manulife that purchases or sells the assets of the funds in order to adjust the fund holdings in light of all transactions made by policyholders and their members. Though the use of words such as “purchase” or “sell” do not accurately reflect the nature of the policy issued by Manulife, it makes it easier for you to understand these various transactions.”
Systematic Asset Rebalancing (SAR)
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To achieve your retirement savings goals you need to choose investment instructions that are consistent with your investor profile and investment period by:
Day-to-day market fluctuations will cause your asset mix (your current holdings) to change, as a result your asset mix may then become either more conservative or more aggressive than your investment instructions. Traditionally, to maintain their investment instructions, investors had to monitor and manually rebalance their assets. Manual rebalancing of assets required investors to perform calculations, and then request interfund transfers; this process could be time-consuming and complicated. Systematic Asset Rebalancing (SAR) is an automatic process by which Manulife will periodically rebalance your assets to ensure that they are as close to your investment instructions as possible.
Click on a subject below to find out more about SAR.
Yes. Dollar Cost Averaging involves investing fixed dollar amounts in an investment fund on a regular basis. Due to market fluctuations, the same dollars will buy more units when the prices are low and fewer units when prices are high. The result is a reduction in the level of risk involved in timing the market (i.e. purchasing units at a high price, and/or selling units at a low price). SAR complements Dollar Cost Averaging by maintaining a disciplined approach to investing.
Market-related funds (including Daily Interest Accumulator (DIA) guaranteed fund) as well as Compound Interest Accumulator (CIA) guaranteed funds will be included in the rebalancing. Please note that the asset mix for CIA funds or Limited Liquidity Funds may be increased through rebalancing, but will not be decreased (doing so could cause an adjustment to the market value of the guaranteed funds or create liquidity issues for the funds considered limited liquidity). If you wish to move money out of guaranteed funds or limited liquidity funds, you can do so by performing an interfund transfer.
Yes. SAR operates on an account-by-account basis. You may activate SAR for one or more of your accounts, but SAR will only be performed on accounts for which the amount to be rebalanced is at least $300. The investment instructions » summary » change page in the Manage your plans section will allow you to activate or deactivate SAR on your account. Please ensure that you complete your request by clicking the 'Submit' button.
Yes. SAR can be activated or deactivated at any time
For most plans SAR is performed once per quarter. However, for some plans, SAR will run according to your statement frequency (e.g. annually/quarterly/semi-annually).
You can make a change to your investment instructions and your reinvestment instructions (for guaranteed funds) at any time. When you choose your investment instructions, you do so based on your comfort level for risk and the time remaining before you need to convert your savings into income. These factors change over time, however; a mix that suits a moderate 25-year old investor probably won’t suit that same moderate investor at age 45. As you get older, you should adjust your investment instructions to reflect the fact that your comfort level for risk will probably decrease to a certain extent.
SAR is available for all registered plans (due to their tax-sheltered nature). SAR is not available for non-registered plans due to capital gains implications when selling market-related funds. If you wish to change the asset mix in a non-registered plan, you may perform an interfund transfer, but be sure to consider any potential tax implications resulting from a capital gain.
SAR will be performed for minimum rebalancing amounts of $300 (by account, for all funds affected).
Yes. However, if you request an interfund transfer just prior to SAR being performed, SAR may undo the results of the interfund transfer.
Only the exact amounts required to perform the rebalancing are sold. [However guaranteed funds and limited liquidity funds will not be sold as part of a rebalancing.]
If your reinvestment instructions are set to reinvest entirely into guaranteed funds, SAR will maintain your asset allocation goals. However, if your reinvestment instructions are different, this may impact on the value-added feature of SAR. For this reason, it is advised to choose reinvestment instructions that are consistent with your asset allocation goals.
Once SAR is activated on an account, it will treat the entire account balance in the same fashion.
As shown in
No. While asset rebalancing operations that you perform manually or online (OLR), are subject to the Policy and procedure with respect to excessive trading, SAR is excluded from this policy.
Example A, where only market-related funds are held; rebalancing will perfectly align the funds with the investment instructions.
Example B, where assets are allocated to market-related funds and guaranteed funds; rebalancing will come as close as possible to (although not necessarily reach) the target investment mix, since guaranteed funds cannot be sold through rebalancing.
For example, the CDN Equity fund is rebalanced as follows:
Please note that certain information, such as the total “assets rebalanced”, found in these examples are not available to members. It is calculated and used by the system automatically. Should you require any further explanation on rebalancing, please contact one of Manulife's Group Savings & Retirement representatives at 1 800 242-1704. |
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