Can segregated funds be more expensive than regular mutual funds?

Segregated funds can indeed be more expensive than regular mutual funds, primarily due to the added features and guarantees they offer. These include principal protection, death benefits, and potential maturity guarantees, which are provided through an insurance contract. Because these guarantees come with additional costs—such as insurance premiums—segregated funds typically have higher management fees compared to standard mutual funds that do not carry such features.

Investors seeking the benefits of these safeguards may have to pay higher fees, which can offset some of the returns on their investments. Therefore, the existence of these insurance guarantees is a significant factor contributing to the higher costs associated with segregated funds, making it clear why they can be more expensive than their regular mutual fund counterparts.