Comparing Segregated Funds & Mutual Funds

What's The Difference Between a Segregated Fund and a Mutual Fund?

Do you like the feeling of knowing that your money is well invested and well protected? Segregated funds combine the growth potential of a mutual fund with the security of a principal guarantee.

Guarantees:

Principal guarantee: Segregated funds operate under a fixed contract term, with a principal guarantee that protects your investments at maturity or death.

Maturity guarantee: When a deposit matures and is redeemed (a minimum of 10 years from the date of deposit), you will receive a top-up payment, less any withdrawals and fees, if the market value is less than the guaranteed amount.

Death benefit guarantee: When a segregated fund annuitant dies and the market value of the investment has declined, the named beneficiary will receive the guaranteed amount, less any withdrawals and fees.

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 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 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.