What is a segregated fund?

A segregated fund is indeed an investment vehicle that resembles a mutual fund but includes additional insurance benefits, making it distinct from other types of investment options. It pools investors' money to purchase a diversified portfolio of assets, such as stocks and bonds, while also providing features typically associated with insurance products, like maturity guarantees and death benefit guarantees.

The insurance component is crucial; it ensures that upon the policyholder's death or at maturity, a certain amount is paid out, regardless of the market value of the fund at that time. This combination of investment growth potential with a level of risk protection appeals to many investors, especially those looking for a balance between growth and security.

In contrast, while the other options mention investment concepts, they each focus on specific types that do not encapsulate the features and benefits inherent to segregated funds. For instance, the focus solely on equity stocks does not account for the broader diversification that segregated funds provide. A savings account with guaranteed interest rates lacks the growth potential and insurance benefits associated with segregated funds. Lastly, private investment funds targeting high returns often do not include the insurance features integral to the nature of segregated funds. Thus, the correct understanding of a segregated fund highlights its dual nature as both an investment tool