What distinguishes segregated funds from mutual funds?

Segregated funds are distinct from mutual funds primarily due to the insurance guarantees they provide. This feature allows policyholders to receive a guaranteed minimum return upon maturity or in the event of death, regardless of the market performance of the underlying investments. This insurance aspect adds a layer of security for investors who may be concerned about fluctuations in the market.

Investors in segregated funds benefit from a degree of capital protection, which is not available with traditional mutual funds. Mutual funds typically do not offer any guarantees, and the returns are solely based on the performance of the assets within the fund. This risk mitigation element makes segregated funds particularly appealing to individuals looking for long-term investment options with some assurance of principal.

The other characteristics mentioned in the alternatives do not accurately reflect the fundamental differences between segregated and mutual funds. For instance, while it is true that fees can vary, the notion that segregated funds inherently have higher fees is not a distinguishing feature. Additionally, segregated funds are not exclusively available to institutional investors; they are available to all types of investors, including individual retail investors. Finally, while there may be minimum investment amounts associated with both segregated funds and mutual funds, this does not serve as a defining trait, as various investment products can have