Segregated Funds

What are Segregated Funds?

I deal almost exclusively in Segregated Fund investments for my clients.  I work with a number or top providers like SunLife and Manulife, but almost always in Segregate Funds.  A lot of people don’t even know what they are.  Well it’s time to put an end to that.  Here goes:

Segregated Funds are Mutual funds with guarantees attached to them.  It’s just that simple.  They are the more safe and secure twin sister to the Mutual Fund.

A segregated fund does everything a mutual fund does like investing in a basket of different stocks and bonds with a particular theme like Canadian  Equities or Global Bonds, but then to make them even more secure, the selling company offers a maturity guarantee and a death benefit guarantee on the investment as well.  Most commonly at 75% Maturity and 100% Death Benefit Guarantee. 

Segregated Funds - where to invest

What that means is that the principal money you invest in a Seg Fund is guaranteed.  So even if they entire market crashed ( and a lot of people worry about that) the worst you would could do is be down by 25% or conversely if you were to pass away (God forbid) your family and loved ones would still be guaranteed 100% of the principal you invested (minus and withdrawals you may have made).

I don’t know about you, but guarantees like that help someone like me sleep at night.  But wait! There’s more!

Segregated funds are also Creditor Protected.  This means that if someone were to sue you and go after you financially, they cannot go after the money that is invested in the Segregated Funds.  Now, this particular clause is not entirely set in stone, there are many cases you can research where people have tried to get the money in Seg funds and failed. This may not be important to most of you, but if you are a business owner or someone who has recently been divorced, this may be crucial information to know.

creditor protection with Segregated Funds

And lastly, Segregated Funds are the only investment where you can name a beneficiary with a Non Registered investment.  By having named beneficiaries on your investments you are able to bypass your Estate upon your passing that money goes directly to your family or loved ones in a matter of weeks instead of a months or years.  Is there someone in your life that might need financial help immediately after your passing?  What would happen if they had to wait 18 months or longer to receive an inheritance?   This is a very easy and cost effective way to avoid that problem.

So there you have it.  You now know what a Segregated Fund is, how it works and what benefits it has.  I guess the next question is, how much would you like to invest?  

Got questions? Gimme a call or shoot  me an email.  I’m happy to help.

Want to read more about investments? Please read our article, on Ethical Investing.

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