Why are segregated funds often classified as long-term investments?

Segregated funds are often classified as long-term investments primarily because they have longer investment time horizons due to the inherent volatility found in the financial markets. These funds are typically subject to market fluctuations, which means that, over shorter periods, their value can be significantly affected by market downturns.

Investors utilizing segregated funds are usually advised to adopt a long-term perspective, allowing for potential market recovery and growth over time. This long-term approach facilitates the potential for yields that align with the investor's financial goals, particularly for retirement planning or wealth accumulation.

Additionally, segregated funds come with benefits such as guarantees on principal investment and death benefits, which can further encourage a longer investment horizon as these features enhance the overall stability of the investment in the face of market volatility. This emphasis on a long-term strategy underscores their classification as long-term investments, as investors are better positioned to weather short-term fluctuations and optimize their returns over an extended period.