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Segregated Funds

If you aim to enhance your wealth while ensuring insurance protection for your savings, the optimal choice is to invest in segregated funds. These policies provide safety by operating as a collective fund invested in diverse assets like stocks, bonds, and mutual funds, all managed by skilled investment professionals. Engaging with segregated funds allows you to leverage the expertise of investment professionals, enabling the diversification of your investments and the mitigation of risks.

What sets segregated funds apart is the additional insurance protection they offer. These policies assure that a portion of your investment is safeguarded, irrespective of market performance. In the event of a decline in the value of your investments, you can be assured that a minimum percentage of your initial investment will be returned to you. With various series options to choose from, you can select the segregated fund policy that aligns with your investment goals and risk tolerance, providing the peace of mind that your savings are protected.

Different Types of Segregated Funds in Canada

Equity Segregated Funds

These funds primarily invest in the stocks and shares of publicly traded companies with the goal of achieving long-term capital appreciation through a diversified equity portfolio. While they offer the potential for higher returns, it's important to note that they also come with a higher level of risk compared to other categories of segregated funds.

Fixed Income Segregated Funds

Fixed income segregated funds concentrate on investing in fixed-income securities like government bonds, corporate bonds, and other debt instruments. The primary objective of these funds is to offer a consistent stream of income with relatively lower risk in comparison to equity funds. They are well-suited for investors who prioritize stable income and capital preservation.

Balanced Segregated Funds

Balanced segregated funds, as the name implies, provide a well-rounded combination of equity and fixed income investments. The goal of these funds is to achieve a harmonious balance between potential growth and income generation while effectively managing risk. They are apt for investors seeking a moderate level of risk with the potential for both capital appreciation and income.

Asset Allocation Segregated Funds

Asset allocation segregated funds adapt their investment mix dynamically in response to market conditions. The objective of these funds is to enhance returns by strategically allocating assets across various asset classes, including equities, fixed-income securities, and cash. The management of asset allocation is undertaken by the fund's portfolio manager or investment team to adeptly respond to evolving market conditions and capitalize on investment opportunities.

Target Data Segregated Funds

Target date segregated funds are crafted to correspond with a particular target retirement date. These funds systematically alter their investment mix over time, adopting a more conservative approach as the target date approaches. The asset allocation is automatically adjusted to diminish risk and safeguard capital as the investor's retirement date draws nearer.

Specialty Segregated Funds

Specialty segregated funds concentrate on sectors, themes, or investment strategies. Examples include funds centered on socially responsible investing, global infrastructure, technology, or emerging markets. These funds offer investors the chance to engage in specialized areas according to their interests and preferences. It's crucial to recognize that segregated funds provide specific advantages, including potential creditor protection and the option to appoint a beneficiary outside of the estate. Nevertheless, they might entail higher fees in comparison to conventional mutual funds. Seeking guidance from a financial advisor is advisable, as they can assist you in comprehending the different types of segregated funds, their characteristics, risks, and suitability based on your investment goals and risk tolerance.

Key Features

Segregated Funds Options

Market Reset Feature

Segregated funds provide a distinctive market reset feature, enabling investors to secure their market gains upon reaching maturity or a death guarantee. This feature offers additional protection and the potential for further growth.

Professional Management

Experienced portfolio managers professionally oversee segregated funds, making investment decisions on behalf of investors. This arrangement can instill peace of mind and contribute to maintaining a well-diversified portfolio.

Tax Efficiency

Tax benefits are inherent in segregated funds, allowing individuals to defer taxes on capital gains until the policy is redeemed or until the policyholder passes away. Embracing this strategy has the potential to lead to significant reductions in tax obligations over the long term.

Flexibility and Customization

Segregated funds provide diverse and flexible options, allowing investors to customize their policies based on a variety of factors such as different investment objectives, maturity guarantees, and death benefit guarantees. This flexibility enables investors to align their policies with their specific needs and goals.

Estate Protection

Segregated funds provide enhanced estate protection, guaranteeing that your beneficiaries receive the complete value of your policy without the necessity for probate, a process that can be both time-consuming and costly.