Segregated Funds & the Sons of Scotland

A Segregated Fund is a collection of equities, bonds, and/or other investments that are managed by a professional investment manager. While a Mutual Fund is considered a security, a Segregated Fund is considered an insurance product, because there is a guarantee provided to protect all, or a portion of the money in the Fund. Sons of Scotland Segregated Funds are RSP eligible, and can be converted to Registered Income Funds when the time comes.

Segregated Funds get their name because their holdings must be maintained separately from the insurance company’s assets and are held for the sole benefit of the policyholder.

Protection for your capital

Segregated Funds, also known as Individual Variable Insurance Contracts (IVIC’s), provide protection for your investment capital by guaranteeing the return of at least 75% of the premiums paid in, without interest, (less any withdrawals) upon death, or at the maturity of your insurance contract.

Three of the four Segregated Funds offered by the Sons of Scotland guarantee 75% of your net premiums on the policy maturity date, the fourth guarantees 100%, providing the funds have been invested for at least 10 years.

AS WITH ALL INVESTMENTS, THERE ARE RISKS INVOLVED SHOULD THE MARKET DROP.

If you need the growth potential available from mutual funds, but also want some protection for your capital, Segregated Funds could be the investment vehicle for you.

Advantages of Segregated Funds

  • Potential for creditor protection
    • A Segregated Fund can be protected in event of personal bankruptcy if you have designated a ‘preferred class’ beneficiary. However, anyone who deliberately moves assets into a Segregated Fund to avoid their debts could lose this protection.
  • Minimizing costs and delays of probate
    • Probate is a legal process that certifies the validity of a will and essentially allows assets to be transferred at death to your beneficiaries. Probate fees are not charged on Segregated Funds provided you have a designated beneficiary, since this asset will not become part your estate.
  • Instant diversification
  • Low minimum investment requirements
  • Wide variety of investments available
  • Customizable risk levels

The Sons of Scotland Segregated Investment Funds, which include the Short-Term Income Fund, Canadian Fixed Income Fund, Canadian Equity Fund, and Diversified Growth Fund, were established to offer you a variety of investment options, in addition to life insurance protection. The assets of these Funds are segregated from the other assets of the Association, but are owned by the Association, and are non-guaranteed assets where you assume the investment risk in exchange for the opportunity of potentially higher returns.

The Funds generally seek to provide investors with an opportunity to diversify their investments in order to achieve security of capital and a reasonable risk-adjusted rate of return. Since each Fund has different investment objectives, you should ensure the Fund(s) you choose to invest in meet your particular investment objectives and requirements.

Short-Term Income Fund (Money Market Fund)

Objectives:

  • To maximize the total rate of return and provide a high level of current income
  • A portfolio of high-quality, liquid money market securities
  • Managed to provide a low risk, secure source of interest income
  • The Short-Term Fund is designed for the conservative investor looking to maximize income while assuming a very low risk of loss

Canadian Fixed Income Fund (Bond Fund)

Objectives:

  • To achieve long-term growth, preservation of invested capital, using fixed income securities
  • Invests either directly or indirectly;
    • in units of pooled and/or mutual funds,
    • in debt securities issued or guaranteed by various levels of government,
    • in highly-rated corporate bonds and debentures.
  • The Bond Fund is for the conservative investor looking to maximize income but is prepared to assume some risk of loss in order to earn a higher rate of return.

Canadian Equity Fund (Equity Fund)

Objectives:

  • To achieve above average long-term rates of return and long term capital growth
  • Invests either directly or indirectly;
    • in units of pooled and/or mutual funds
    • in equities of medium and large capitalized Canadian companies
  • The Equity Fund is for the more aggressive investor looking to maximize capital gains thereby assuming a higher level of risk of loss.

Diversified Growth Fund

Objectives:

  • To achieve an above average rate of return and long-term growth
  • Invests either directly or indirectly;
    • in units of pooled and/or mutual funds,
    • equity securities
    • fixed income securities
    • short term money market instruments
  • There may be short term exposure to higher levels of risk
  • The Diversified Fund is for the investor looking to maximize capital gains by diversifying his/her portfolio among several different classes of assets but assumes a moderate risk of loss.

These Funds are now available and a detailed description of each Segregated Investment Fund can be found in the Summary Information Folder which is available upon request from Head Office.

If you would like to invest or would like more information please contact Head Office at 1-800-387-3382, (416) 482-1250 or by e-mail at info@sonsofscotland.com

Segregated Funds Chart