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Personal Insurance > Retirement Solutions > Segregated Funds > Segregated Funds Resource Centre > Segregated Funds vs. Mutual Funds

Segregated Funds vs. Mutual Funds

Segregated funds are similar to mutual funds in a few ways. You invest in a fund, both contain a diversified group of investments, it’s easy to access your money, and they both offer professional money management.

There are, however, some unique advantages to segregated funds that mutual funds don’t offer:

  • Maturity guarantees. A segregated fund policy guarantees that the value of your investments at maturity will not be less than a specified percentage of the amount you invest.3
  • Death benefit guarantees. Your beneficiary will receive the guaranteed amount or market value of your investments—whichever is higher.3
  • The ability to bypass probate. Your beneficiaries get their payout faster, the privacy of your affairs is maintained and the cost of probate fees is avoided*.
  • Potential creditor protection for non-registered accounts. Your segregated fund assets may be protected from creditors in the event of a bankruptcy.**
  • Resets. The ability to lock in market gains on your investment.

At-a-Glance: Segregated Funds vs. Mutual Funds

FeaturesSegregated
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 growth using resets
 

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.

*Probate fees and requirements vary by province.

**You should consult your legal and financial advisor about your individual circumstances.

Any amount that is allocated to a segregated fund is invested at the risk of the contract holder and may increase or decrease in value. RBC Guaranteed Investment Funds are individual variable annuity contracts and are referred to as segregated funds. RBC Life Insurance Company is the sole issuer and guarantor of the guarantee provisions contained in these Contracts. The underlying mutual funds and portfolios available in these Contracts are managed by RBC Global Asset Management Inc. Details of the applicable Contract are contained in the RBC GIF Information Folder and Contract.