The risk … As the experiences of 2008 are evaluated, long-term investors will want to re-think not only in what they invest, but also how they invest. What is a segregated fund? They generally have a principle guarantee of either 75% or 100% of your capital after 10 years, or in the event of your death. In a medium term investment area such as hedge funds, it is unnecessary and unhelpful that the lack of information for the end clients has in many instances resulted in the entire client base capitulating on account of redemption risk. A segregated fund is considered to be an inter-vivos trust. Some segregated fund contracts also offer income guarantees. Automatic death benefit resets* on the 100% guarantee level lock in the increased value of your investments as they grow. 3 advantages of segregated funds Principal guaranteed – Depending on the contractContract A binding written or verbal agreement that can be enforced by... Guaranteed death benefitDeath benefit Money that your life insurance or savings and … 9) Explain the benefits of owning a segregated contract with respect to the following topics: Credit Protection i. Key features of leverage, liquidity, concentration, and directionality of each underlying hedge fund can be shared. Segregated funds differ from mutual funds, however, in that they have a built-in guarantee for either all or part of your investment, potentially offering a more secure option. Segregated fund contracts guarantee 75% to 100% of your premiums (less withdrawals) when the contract matures, or on your death. This is the most beneficial of segregated funds. Pooled funds allow smaller institutions to access asset classes … • Transparency Clients take confidence in knowing the exact names and types of exposure which comprise their portfolio. Segregated funds come with their own set of unique features. Segregated funds usually come with a partial to full capital guarantee. • Tackling headline risk Segregated account clients have been better able to immediately address questions as to what is in the portfolio on account of the transparency and insight on names provided. Log in, View StumbleForward’s profile on Facebook, View StumbleForward’s profile on Twitter, View +ChristopherHoldheide’s profile on Google+. As the correlation of asset classes moved to 1, and as the impact of deleveraging in a falling and illiquid market was painfully experienced, investors inevitably concerned themselves primarily with stabilizing their portfolios. The magnitude of market movements has been unprecedented as has the volatility. Benefits of segregated funds Segregated fund contracts are sold by insurance companies, which means they provide several insurance benefits that mutual funds do not. In many instances, these risks more than heightened the difficulties for investors. It’s also one of the main reasons that in-the-know Canadians are choosing them over mutual funds. However, when used as a planning tool, it’s important to consider fees and to have a nuanced awareness of the contents of clients’ estate documentation. SSQ segregated funds. • Portfolio evolution Clients benefit from holding a dynamic portfolio that evolves in response to market cycles and as part of overall portfolio progress. Mr. Yates says another major benefit of seg funds for estate planning relates to probate. Estate benefits Segregated fund contracts are insurance (annuity) contracts and as such a beneficiary can be named to receive any proceeds on the death of the life insured (annuitant). Individual clients will have individual concerns and requirements; in general, the elements that investors will most likely focus on are: risk appetite/tolerance, exposure preferences, liquidity requirements, and elimination of heightened indirect exposure. • Effecting change Segregated account clients are able to work in partnership with the investment manager in terms of implementing changes in their portfolio during stress periods. Despite the guarantees offered, these investments carry a risk. Segregated Funds guaranteed return of premiums of anywhere between 75% to 100%, depending on the insurer. It is typically the case that the greater one of these risks is, the more it exacerbates other risks. One main characteristic of segregated funds is they are guaranteed to protect part of your investment, usually 75% to 100%. It’s possible to designate more than one beneficiary, and if several beneficiaries are designated in the contract, it … However, 2008 has brought more issues to the table than simply those of volatility and down-side protection. Naturally, this can range from high-level market commentary to in-depth quantitative and qualitative reviews. A segregated fund is an investment pool structured as a deferred variable annuity and used by insurance companies to offer both capital appreciation and death benefits to … Unlike mutual funds, segregated fund contracts are insurance products, available only from an insurance company. The policy has two phases: A savings phase where there is a guaranteed withdrawal balance The guaranteed withdrawal balance provides a guaranteed rate of growth in the savings phase and; Keith Masterman , LLB, TEP is vice-president, Tax, Retirement and Estate Planning at CI Investments. 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