Which statement best describes the nature of segregated funds?

Segregated funds are investment products that combine features of both investment funds and insurance contracts. They are designed to provide investment opportunities while also offering certain guarantees, such as capital protection, which helps mitigate risk for the investor. This dual nature means that investors not only have the potential for market-related gains but also benefit from the insurance component, which can provide advantages like death benefits and maturity guarantees.

The combination of these investment and insurance features is what defines segregated funds and sets them apart from traditional mutual funds. Investors appreciate this structure, especially in volatile market conditions, as it offers a layer of protection for their capital. Understanding this hybrid nature is essential for recognizing how segregated funds serve as a valuable financial tool for individuals looking for growth potential with added security.