Do you need segregated funds in your portfolio?

Investors must weigh insurance perks against higher costs.

Gail Bebee 8 January, 2018 | 6:00PM

Many Canadians are familiar with mutual funds and exchange-traded funds. Less well known is another investment product: segregated funds. Yet these funds, sponsored by life-insurance companies, have a substantial presence in Canada.

At the end of October, net assets held in seg funds stood at $119.9 billion, and year-to-date gross sales were $11.2 billion, according to Strategic Insight's November 2017 Insurance Advisory Service Report. When the various purchase options are included, there are more than 8,400 seg funds listed in the Morningstar fund database.

Clearly, a significant number of investors find merit in seg funds, which are essentially mutual funds wrapped up in insurance-policy contracts. The insurance features and several non-investment attributes are the main reasons that investors buy these funds.

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About Author

Gail Bebee

Gail Bebee  Gail Bebee is an independent personal finance speaker, teacher and the author of No Hype--The Straight Goods on Investing Your Money. She can be reached at gbebee@gailbebee.com; her website is www.gailbebee.com.

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