Segregated Fund

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.

BREAKING DOWN '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 Answer >>
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    The correct answer is d). A registrant is required to segregate client funds, send notice whenever funds have been moved ... Read Answer >>
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