Page 237 - A Canuck's Guide to Financial Literacy 2020
P. 237
237
Differences between Mutual Funds & Segregated Funds
Advantages of Segregated Funds
• Professional Management
o In a similar fashion to mutual funds, segregated funds are managed by
professional money managers. These managers are compensated via the
management expense ratio that a segregated fund would charge. Segregated
funds have higher fees than mutual funds.
• Diversification
o Segregated funds are highly diversified. For example, a North American
equity fund may invest in a basket of North American companies’ stock. The
more diversified an investment is, the less the volatility.
• Tax Benefits
o We've discussed the benefit of resets that an investor utilizes but it's
important to know a distinguishing feature between mutual funds and
segregated funds. Mutual funds distribute income and segregated funds
allocate income.
