Segregated Fund

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DEFINITION of 'Segregated Fund'

A type of pool investment that is similar to a mutual fund, but is considered an insurance product. Proceeds received by the insurance company are used to purchase underlying assets, and then shares of the segregated funds are sold to investors.

INVESTOPEDIA EXPLAINS 'Segregated Fund'

Segregated funds may guarantee a specific return over the life of the investment or upon maturation of the fund. Although there may be a guarantee to the investor of a segregated fund, there will also likely be penalties if the investor sells shares of the fund before their maturity. These guarantees come with costs to the investor - in this case, opportunity costs.

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RELATED FAQS
  1. How do segregated funds differ from mutual funds?

    Mutual funds are investment vehicles that many investors have embraced as a simple and relatively inexpensive method for ... Read Full Answer >>
  2. What are the best mutual funds for investing in the electronics sector?

    Within the technology sector, the electronics industry continues to experience growth as the technology that supports producing ... Read Full Answer >>
  3. How do waivers, reimbursements and recoupments affect a fund's expense ratio?

    Waivers, reimbursements and recoupments can initially serve to keep a fund's expense ratio lower than it would be otherwise. ... Read Full Answer >>
  4. What are some popular mutual funds that give exposure to the drugs sector?

    The pharmaceutical industry has experienced outstanding growth in the 10 years leading up to 2015, consistently outperforming ... Read Full Answer >>
  5. What can cause the rate of return to be negative?

    Several factors can cause an investment to have a negative rate of return. Poor performance of a company or companies, turmoil ... Read Full Answer >>
  6. What information should I focus on in my mutual fund's prospectus?

    The U.S. Securities and Exchange Commission (SEC) requires investment companies to provide potential and current investors ... Read Full Answer >>
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