In the past on DINKS Finance we have discussed various investment products such as Mortgage Backed Securities, Discount Brokerage Services, as well as Junk Bonds. Today we are going to explore a not so common type of investment. The reason I say that Segregated Funds are a less common type of investment is because they are only offered through Insurance companies. Segregated Funds are not offered in mass by financial institutions.
Segregated Funds are the perfect balance between a life insurance contract and a mutual fund. They are similar to a mutual fund because Segregated Funds are a pooled investment with a daily valuation. Investors purchase units of a Segregated Fund just as we do a Mutual Fund. We invest our money into a Segregated Fund and it is mass managed by a professional fund manager.
Segregated Funds are similar to a life insurance contract because they can offer a guaranteed rate of return or guaranteed value upon maturity. Segregated Funds offer a potential death benefit upon death of the investment owner which is similar to an insurance contract. Segregated Funds are usually purchased for a fixed number of years with a maturity date; this is similar to a term life insurance policy.
The Benefits of Segregated Funds
Professional Management. The money that we invest into Segregated Funds is actively managed by a professional fund manager. They buy and sell assets within the fund based on the current market conditions as well as the investment objectives of the Segregated Fund.
Portfolio Diversification. Segregated Funds offer a variety of different types of investments with different levels of risk. Segregated Funds invest in a variety of different assets which can include Income investments such as bonds, Balanced Investments, as well as Equity Investments such as Blue Chip Stocks.
Protection against Creditor Insurance. Segregated Funds are not sizeable for professionals or self employed individuals who may be personally liable for malpractice.
Estate Planning Advantages. The beneficiary of a Segregated Fund receives the benefits directly after the plan owner dies. Benefits from a Segregated Fund do not need to pass through Probate. This is a great advantage of Segregated Funds because Probate fees can be very costly.
To Learn More About Segregated Funds
Mackenzie Financial offers a Mackenzie Cundill Canadian Security Segregated Fund, a Mackenzie Cundill Canadian Balanced Segregated Fund, as well as the Mackenzie Cundill Value Segregated Fund as part of their fund line up.
RBC Insurance offers a variety of Segregated Funds such as the RBC Balanced Global Fund, the RBC DS Growth Global Fund, as well as the RBC DS Canadian Focus Fund.
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.
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