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Empire Life seeks to expand investment reach

By Donna Glasgow | November 18 2013 07:02PM

Empire Life is continuing to see significant growth in its segregated fund sales. The company remains committed to this market and is also looking to grow its new mutual fund business, says Drew Wallace, president and CEO of Empire Life Investments Inc.

“We’ve had strong growth within our family of segregated funds over the last number of years. Year-to-date we’re still experiencing a 15% year-over-year improvement in our overall segregated fund sales,” he said during an interview in late October.

Wallace added that Empire Life is taking a long-term approach to the seg fund space. “We continue to see it as a very viable exciting opportunity for us and ultimately, at the end of the day, it represents an outstanding solution for a great many Canadians.”

Value-oriented discipline

He believes that Empire Life’s conservative, value-oriented investment discipline, which it has applied for close to 50 years, provides the company with a different level of security or risk management than some of its competitors in the seg fund market. “We manage 100 cents of every dollar internally through our own team. We do not subadvise any of those dollars out to others…That does afford us potentially a different view than some of the competitors that we face out there. Generally speaking, compared to the industry, we are very optimistic and very bullish on the segregated fund space.”

Empire Life also remains “very committed” to the guaranteed withdrawal benefit (GWB) space, adds Wallace. Various players have left this market due to a combination of pressures, such as market volatility, the low interest rate environment and higher capital requirements.

Empire Life entered the GWB market in the fall of 2008 with a very conservative offering compared to some other competitors. “We came with a series of balanced funds and portfolios managed with a conservative value orientation. So we did not come out with a series of standalone equity funds. And, quite frankly, that put us in a different position than others and it gave us a chance to grow and weather the storm more effectively than others.”

He adds that his company has seen good growth with its GWB, but it has also seen strong growth across all of its seg fund line. “It hasn’t been exclusive to the guaranteed minimum withdrawal product.”

Asked whether Empire Life might pull back on some of its GWB’s benefits or features, Wallace said “We have nothing on the drawing board today. We’re very comfortable with our offering today.” He adds, though, that this is something that the company assesses on a regular basis in order to ensure that its product mix is managed in an appropriate balance.

At present, he says the company is very comfortable with its investment product flows and with its overall product mix. “Should those change, we would re-evaluate this product as we would some of our other offerings as well.”

Mutual funds

Wallace says Empire Life Investments is also making a major marketing push to promote its mutual funds. Empire Life launched a line of 10 mutual funds – five portfolio funds and five standalone – in January 2012.

“I would say that on the mutual fund side it was a rather slow start, as you’d expect with a new product extension, but we’ve seen significant improvement in our overall flows over the last four or five months.”

He adds that offering both seg funds and mutual funds allows the company to better serve Canadians as many boomers move from the accumulation period to the deaccumulation period of their financial lives.

With fewer Canadians able to rely on traditional defined benefit plans in retirement, a diverse investment portfolio is becoming increasingly important. “The marriage of some segregated fund solutions with mutual fund solutions as one gets closer to their retirement years – and moves into their retirement years – is an outstanding value proposition…We’re just very, very big on that.”

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