Segregated funds vs. mutual funds: how do they compare?

Many investors have heard about mutual funds and the wealth potential they have as an investment. Fewer know about segregated funds solutions (seg funds) and their unique features and advantages.

Like mutual funds, seg funds are pooled investments. They combine the money of many investors, creating economies of scale and giving you access to investment opportunities that might not be available otherwise. Seg funds:

  • are professionally managed
  • can invest in a diversified portfolio
  • offer a wide range of funds to choose from.

Unlike mutual funds, segregated fund contracts are insurance products, available only from an insurance company. This provides some unique advantages, including:

  • estate planning and wealth transfer features
  • potential protection from creditors
  • asset protection through death benefit and maturity guarantees.

Key differences at a glance


Mutual funds

Segregated fund solutions

Does my investment have growth potential?



Can I invest in industry-leading funds?



Will my investment be exempt from seizure by creditors?

Sometimes. Consult a legal advisor to learn more

Yes, in certain circumstances. Consult a legal advisor to learn more 

Are there estate planning advantages?


Yes. As long as a beneficiary other than the estate is named, the death benefit proceeds of your segregated fund go quickly and directly to your beneficiaries upon your death – without the delays and expense of settling your estate.

What’s the cost?

The costs associated with mutual funds can include management fees, operating costs, commissions, trailing commissions and applicable sales tax. Some funds might also include a charge for early withdrawal.  In addition to the fees associated with mutual funds, the guarantees offered by segregated funds are an additional cost of insurance. A contract might also include a charge for early withdrawal. 

Segregated fund contracts are offered by insurance companies and are governed by life insurance legislation. Mutual funds are offered by investment management firms and are governed by securities legislation.

What’s the right investment for you?

Both mutual funds and segregated funds are excellent choices for long-term investing and building your wealth. The choice that’s right for you depends on where you are in your investment journey, your investment style, and your financial goals. Your advisor can help you find a solution that meets your needs.

This document is not intended to provide details of any product. For detailed information, please consult the applicable Information Folder, Contract and Fund Facts for segregated fund products and the Prospectus and Fund Facts for mutual funds. The Manufacturers Life Insurance Company (Manulife) is the issuer of insurance contracts containing Manulife segregated funds and the guarantor of any guarantee provisions therein. Manulife Investment Management is a trade name of The Manufacturers Life Insurance Company. Any amount that is allocated to a segregated fund is invested at the risk of the contractholder and may increase or decrease in value. Age restrictions and other conditions may apply. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the fund facts as well as the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Manulife, Manulife Investment Management, the Stylized M Design, and Manulife Investment Management & Stylized M Design are trademarks of The Manufacturers Life Insurance Company and are used by it, and by its affiliates under lic

Solutions Magazine

Solutions Magazine

Manulife Investment Management

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