What is the main purpose of segregated funds?

The main purpose of segregated funds is to achieve growth while providing protection against market fluctuations. Segregated funds are investment vehicles that typically offer potential for returns similar to mutual funds, but they also come with unique features that provide investors with certain guarantees.

One of the key characteristics of segregated funds is their ability to provide a guarantee on the principal amount invested, often after a specific holding period. This can help protect investors from significant losses during market downturns. Additionally, segregated funds often come with insurance features, such as maturity and death benefits, that further shield investors from volatility.

Investors in segregated funds can benefit from market growth, as the funds are linked to various underlying assets. However, they also enjoy the security of knowing that their investments have a certain level of protection, which is appealing to those who might be concerned about the risks associated with the stock market or other investment highways. This dual benefit of growth potential with downside protection clearly defines the purpose of segregated funds.