What is one major advantage of segregated funds compared to mutual funds?

One major advantage of segregated funds compared to mutual funds is that they can lock in investment gains. This means that investors in segregated funds can benefit from a feature known as a "reset option," which allows them to lock in the value of their investments at certain intervals. If the market value of the segregated fund increases, the policyholder can choose to set the new, higher market value as the guaranteed amount, thus protecting those gains even if the market subsequently declines.

This locking mechanism provides a level of protection against market volatility, offering peace of mind to investors who are concerned about fluctuations in their investment's value. Therefore, in times of market uncertainty, this capability can be particularly advantageous, ensuring that investors do not lose the gains they have achieved.

In contrast, while segregated funds do have other benefits, such as potential guarantees on death benefits and creditor protection, they do not inherently provide guaranteed returns. They also are subject to management fees, just like mutual funds, and they can invest in a range of assets beyond just government securities. This feature of locking in gains highlights a significant distinction that can appeal to investors seeking security in their investment decisions.