What does the maturity guarantee in a segregated fund ensure?

The maturity guarantee in a segregated fund is designed to provide a level of security for investors by assuring that they will receive a certain percentage of their original investment back at the maturity date. This feature is particularly important for risk-averse investors who may be concerned about market fluctuations and seek protection against losses. Typically, the maturity guarantee returns a certain percentage—often 75% to 100%—of the initial investment, regardless of market performance at the time of maturity.

This guarantee allows investors to have peace of mind knowing that their capital is protected up to a specified amount, regardless of the performance of the underlying assets in the segregated fund. It ensures that an investor won't lose their capital completely and that they will receive a defined minimum benefit at the end of the investment period, aligning with the essential function of the maturity guarantee.