DEFINITION of 'Segregation'

Segregation is the separation of an individual or group of individuals from a larger group, often in order to apply special treatment to the separated individual or group. Segregation can also involve the separation of items from a larger group, as seen with the handling of funds in certain types of accounts.

Segregation applied to the securities industry, for example, requires that customer assets being held by a broker or other financial institution be kept separate – or segregated – from the broker or financial institution's assets. This is referred to as security segregation.

BREAKING DOWN 'Segregation'

Segregated accounts usually have different privileges and requirements than those held by the general public. Portfolio managers will often create portfolio models which will be applied to the majority of the assets under management. However, some discretionary accounts may be introduced for investors with requirements or risk aversion deviating from the behavior of typical individuals.

  1. Commingling (Commingled)

    1. In securities, it is the mixing of customer-owned securities ...
  2. Pooled Funds

    Funds from many individual investors that are aggregated for ...
  3. Escrow

    A financial instrument held by a third party on behalf of the ...
  4. Commingled Fund

    A fund consisting of assets from several accounts that are blended ...
  5. Asset Allocation

    An investment strategy that aims to balance risk and reward by ...
  6. Clowngrade

    An upgrade or downgrade of a security for reasons considered ...
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