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
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  3. What happens when I want to sell my A-shares of a mutual fund?

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  4. What does the information ratio tell about the design of a mutual fund?

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  5. Is it better to buy A-shares or a no-load mutual fund?

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  6. Are Class A mutual funds a better choice for long-term investments or short-term ...

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