What distinguishes segregated funds from mutual funds?

Segregated funds are distinct from mutual funds primarily due to the guarantees they offer. Specifically, segregated funds provide capital protection, meaning that the investor is guaranteed to receive a minimum percentage of their investment back upon maturity or upon the investor's death. This feature enhances the appeal of segregated funds to conservative investors or those seeking more security in their investment portfolios.

This capital guarantee is a significant aspect that helps segregated funds stand out, as mutual funds do not typically offer any such guarantees and are subject to market fluctuations that can result in a loss of principal. Additionally, segregated funds may also provide other benefits, such as creditor protection, which further differentiates them from mutual funds.

The other aspects mentioned do not highlight the core difference; for instance, while it might be true that some segregated funds have higher management fees, this is not a definitive distinguishing factor. Similarly, the assertion about no investment options being available is inaccurate because both fund types have a variety of investment choices. Lastly, segregated funds are not limited exclusively to investments in bonds and fixed income; they can also include equity investments and various asset classes, allowing for broader diversification.