How does the maturity guarantee function in segregated funds?

The maturity guarantee in segregated funds is designed to provide peace of mind to investors by ensuring that a specified percentage of their initial investment is returned at maturity, regardless of the fund's performance. This means that if an investor holds their investment until the maturity date, they will receive at least the guaranteed amount, which often ranges from 75% to 100% of the original investment, depending on the specific terms of the contract.

This feature is particularly attractive to conservative investors who wish to limit downside risk while still benefiting from market participation. The maturity guarantee helps mitigate the impact of market volatility over the investment period, offering a level of security against poor market conditions that could diminish the fund's value.

While the other options present potential benefits related to the investment experience, they do not accurately depict how the maturity guarantee operates. For instance, while some segregated funds may allow early withdrawals, the maturity guarantee specifically pertains to the amount guaranteed at the maturity date. Similarly, while fees may be a consideration in any investment product, the maturity guarantee does not inherently ensure that withdrawals will not incur fees. Lastly, the notion of producing guaranteed annual returns is not a function of the maturity guarantee; instead, it simply protects the principal invested amount at a set point in