Which of the following is a characteristic of segregated funds?

Segregated funds are a unique investment product that combines investment features with insurance benefits, notably offering insurance guarantees. One of the primary characteristics of segregated funds is that they often provide a guarantee on the capital invested, subject to certain conditions like holding the investment for a specific period. This aspect is appealing to investors who want some level of security amid market volatility, as these guarantees can help protect the capital against losses.

In addition to capital guarantees, segregated funds may also provide benefits like maturity guarantees and death benefits, which ensure that a minimum amount is paid out to beneficiaries regardless of market performance. This combination of investment growth potential and risk management is what distinguishes segregated funds from traditional mutual funds and stocks, making them an attractive option for risk-averse investors.

Understanding the insurance aspects of segregated funds allows investors to grasp how these funds can fit into their broader financial goals, particularly those concerned about market fluctuations and seeking a level of assurance in their investment outcomes.