More Than a Mutual Fund

Good Morning DINKS. We have discussed Mutual Funds and investing in Mutual Funds several times here on DINKS Finance.  Today we are going to give you some information on different types of investment options that are either a variation of a Mutual Fund, a different type of Mutual Fund, or simply put an investment option that is just plain more than a Mutual Fund.

Segregated Funds

Segregated Funds are offered by Insurance companies.  They have similar qualities to a Mutual Fund such as being sold in units as well as a daily fluctuation in the unit values; segregated funds also have similar qualities to an insurance policy.  Segregated Funds are also commonly known as Guaranteed Income Funds because they offer a guaranteed maturity value as well as a guaranteed death benefit. RBC Insurance, Sun Life Financial, and Manulife Investments all offer Segregated Funds.

Labour Sponsored Funds

Labour Sponsored Funds are offered by some Wealth Management and Investment Firms.  The purpose of Labour Sponsored Funds is to invest in small and medium size businesses.  There are also tax advantages of investing in Labour Sponsored Funds because they support the long term growth of local growing businesses.  Labour Sponsored Funds are Venture Capital investments with a long term investment horizon. Labour Sponsored Funds are a great equity investment for a well diversified investment portfolio, but investors should be aware of the associated risks when investing in small and medium sized businesses TD Waterhouse offers Labour Sponsored Funds.

Target Date Funds

Target Date Mutual Funds are designed to invest for a specific amount of time until a target date is reached.  These are a common investment type for both Education Savings as well as Retirement Savings because they both require an approximate target date. Target Date Funds are Mutual Funds and therefore they are an open investment that never expires.  If we take our retirement before or after our target date it is ok because the target date is just a goal, it is not a maturity.

Target Date Mutual Funds offer a tactical asset allocation that is rebalanced as the target date approaches.  If we invest in a Target 2020 Fund our Mutual Fund will have a more aggressive asset allocation (with investments in equities) the farther away we are from the year 2020.  As the years pass and we approach our target 2020 date the asset allocation is rebalanced to become more secure and income orientated. Fidelity Freedom Funds are Target Date Mutual Funds.

Index Funds

Index Mutual Funds have a passive management style because they follow the performance of a major Market Index.  Index Mutual Funds do not have a Fund Manager who actively buys and sells holdings within the Mutual Fund and this is why the Management Fees are lower.  Many Mutual Fund companies offer Index Funds for Local, International, Bond, and Equity Mutual Funds.  Fidelity offers both Bond and Stock Index Funds. AGF also offers a variety of Index Mutual Funds.

Kristina Tahnyak

Tahnya is a Certified Financial Planner and former Investment Advisor turned marketing and communications professional She holds a degree from Concordia University, is debt free and currently works in the field of digital marketing.