Segregated funds in Canada are gaining popularity among investors who want market exposure along with principal protection and estate planning advantages. Unlike mutual funds, segregated funds are insurance products offering both investment growth and a level of guarantee. For individuals seeking the best segregated funds in Canada, choosing the right provider and fund type is essential. These funds offer peace of mind with death benefit guarantees, maturity guarantees, and creditor protection making them ideal for risk-averse investors or those concerned about wealth transfer to heirs.
What Are Segregated Funds?
Segregated funds, often referred to as ‘seg funds,’ are investment products offered by insurance companies. They are similar to mutual funds in that they pool investors’ money and invest in a diversified portfolio of stocks, bonds, or other securities. However, segregated funds are wrapped in an insurance contract, which gives them unique features such as:
- Maturity guarantees (usually 75% to 100% of principal)
- Death benefit guarantees
- Creditor protection in certain situations
- Efficient estate planning with direct beneficiary designation
Benefits of Investing in Segregated Funds
Before diving into the best segregated funds in Canada, it’s important to understand why these products are attractive to some investors:
- Capital protection: Even if the markets decline, investors are guaranteed a portion of their original investment upon maturity or death.
- Estate planning: Segregated funds avoid probate if a beneficiary is named, which helps in faster and private distribution of assets.
- Reset options: Some funds allow investors to reset their guaranteed amounts to lock in gains over time.
- Tax deferral: They may offer tax deferral benefits for non-registered accounts.
Top Segregated Funds Providers in Canada
The quality of segregated funds largely depends on the insurance company offering them. Here are some of the top segregated fund providers in Canada:
1. Sun Life Financial
Sun Life offers a wide range of segregated fund solutions under their Sun Life GIF (Guaranteed Investment Funds) series. They provide options with 75/75, 75/100, and 100/100 guarantees, giving investors flexibility based on their risk tolerance. The Sun Life Granite portfolios are popular for long-term investors seeking diversified asset allocations with built-in guarantees.
2. Manulife Investment Management
Manulife’s segregated funds are available under the Manulife GIF Select platform. They offer several investment styles, including growth, balanced, and income-focused portfolios. Manulife is known for solid fund performance, reset features, and an easy online account view system.
3. Canada Life
Canada Life’s segregated funds are structured under the Canada Life Pathways platform. These funds are ideal for conservative investors looking for strong estate planning and protection features. Their segregated funds often include environmental, social, and governance (ESG) options, appealing to socially conscious investors.
4. iA Financial Group (Industrial Alliance)
iA Financial offers a broad selection of segregated funds for both registered and non-registered accounts. Their EcoFlextra and My Education+ platforms are tailored to retirement planning and education savings respectively. iA’s funds are popular for their performance tracking tools and competitive fees compared to peers.
5. Empire Life
Empire Life is another strong player in the segregated fund market, offering Class Plus and GIF product lines. Their unique benefit is the guaranteed lifetime withdrawal benefit (GLWB) feature, allowing for income for life, even if the account value drops to zero. This makes Empire Life ideal for retirees.
Best Segregated Funds in Canada (2025 Overview)
Below are some of the top-performing or most-recommended segregated funds currently available in Canada, categorized by investment goal and risk profile:
Growth-Oriented Segregated Funds
- Sun Life MFS Global Growth Fund: Focuses on global equities with long-term growth potential. Ideal for high-risk tolerance investors.
- Manulife Dividend Income Fund: Offers exposure to Canadian dividend-paying companies with some equity risk.
- iA Industrial Alliance Global Equity Fund: Diversified global exposure across various sectors and countries.
Balanced Segregated Funds
- Canada Life Balanced Fund: A mix of fixed income and equities, ideal for moderate risk takers seeking growth and stability.
- Empire Life Asset Allocation Fund: Actively managed asset mix with flexible allocations depending on market conditions.
- Sun Life Granite Balanced Portfolio: A target-risk fund with automated rebalancing and long-term growth objectives.
Conservative and Income-Focused Funds
- Manulife Strategic Income Fund: Suitable for conservative investors needing regular income through a diversified bond mix.
- iA Bond Fund: High-quality government and corporate bonds for capital preservation and modest returns.
- Canada Life Fixed Income Fund: Primarily composed of fixed-income securities and minimal equity exposure.
Who Should Consider Segregated Funds?
Segregated funds are best suited for individuals who:
- Are nearing retirement and want to reduce risk exposure
- Desire estate planning tools without setting up a will or trust
- Run a business and want potential creditor protection
- Want guaranteed returns in uncertain markets
- Prefer professional fund management with downside protection
Though segregated funds offer many benefits, they typically come with higher management expense ratios (MERs) than traditional mutual funds. Investors should weigh the guarantees and insurance benefits against the higher cost before investing.
How to Buy Segregated Funds in Canada
Segregated funds must be purchased through licensed life insurance advisors or financial planners. Unlike mutual funds, you cannot buy them through regular online brokerages. Investors should request a fund fact document or an information folder from the insurer before investing, which outlines the guarantees, investment mix, fees, and maturity terms.
Steps to Begin Investing
- Consult a licensed insurance advisor to evaluate suitability
- Select the right guarantee level (75/75, 75/100, or 100/100)
- Choose a fund aligned with your investment goal and risk profile
- Designate beneficiaries to maximize estate planning benefits
- Review fees, lock-in periods, and reset options carefully
Finding the best segregated funds in Canada involves balancing performance, insurance guarantees, and investment goals. While these products may not suit every investor due to higher fees, they offer unique benefits that can be extremely valuable for specific financial planning needs. As life insurance companies continue to innovate in their offerings, segregated funds will likely remain a key tool for Canadians looking to protect capital, manage estate planning, and gain investment returns with peace of mind. With careful research and the help of a qualified advisor, investors can confidently choose a segregated fund that fits their financial journey.