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Segregated Funds Investment Solutions

Segregated funds are similar to mutual funds but are offered through insurance companies. Their legal name is an “Individual Variable Annuity Contract”. Segregated funds offer additional unique features that are valuable which are not offered through mutual funds. Here is a quick summary of a comparison between segregated funds and mutual funds.

Comparing segregated funds and mutual funds
WHAT’S THE DIFFERENCE BETWEEN A SEGREGATED FUND AND A MUTUAL FUND?

While segregated funds share many features with mutual funds, they offer additional unique features that are valuable. Here’s a quick summary of the added features that can make segregated funds an excellent alternative to mutual funds.

SEGREGATED FUNDS VS. MUTUAL FUNDS

Features Segregated funds1 Mutual Funds
Professional portfolio management
Diversification among asset classes and management styles
Grow a portfolio while diversifying risk
Liquidity: easy access to your money through daily price valuations
Ability to bypass probate and keep financial affairs private Occasionally2
Potential creditor protection for registered accounts
Potential creditor protection for non-registered accounts  
A guarantee of the principal (or a specified percentage) at maturity3  
A guarantee of the principal (or a specified percentage) at death3  
Lock in market gains using reset  

1 Segregated fund fees are higher than mutual funds, as they include a management fee and an insurance fee component.

2 Non-registered accounts with joint ownership and right of survivorship only(all provinces except Quebec). Registered accounts can bypass probate when a beneficiary is named.

3
Withdrawals reduce guarantees proportionately. Guarantees end at age 100
.

As you will notice, the segregated funds offer guarantees; hence the reason why some insurance companies call them “Guaranteed Investment funds”.


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