SEGREGATED FUNDS GUARANTEE A RETURN

Segregated funds are for the conservative investor who is considering investing in mutual funds. Segregated fund policies have a unique capital protection feature that offers a guarantee of a return of up to 100% of your capital.

Segregated fund capital is guaranteed by an insurer and achieves capital gains just like a mutual fund. So you don't need to lock your money away in low-interest GICs in order to guarantee your capital. An investor maintains the potential for capital growth while at the same time guaranteeing the return of up to 100% of his/her capital. This capital protection, in most cases, applies at maturity in 10 years or at death.

SEGREGATED FUNDS MAY BE GOOD FOR YOU IF:
· You are a conservative investor and yet want higher returns than GICs offer.
· You are a pre-retiree who needs growth, but can't afford to lose money over the long term.
· You are a senior who requires estate protection and certain capital guarantees.

Segregated funds have a slightly higher management expense ratio (MER) that pays for these capital-conserving features. Why would you pay for a death benefit guarantee? Won't the added cost of the insurance element reduce segregated fund returns? The answer is, yes it will, by a small amount. However, suppose that an individual invests $100,000 in a segregated fund that guarantees up to 100% of the capital at death. Assume this person dies just after a drop in the market reduces the initial investment to $85,000. In this case, the full $100,000 investment is paid as a death benefit. Thus the insurance would be a major safeguard for the preservation of the estate.