Understanding Segregated Funds

[indexxx]

I don't think you can buy seg fund with more than 75% return guarantee and it's not simple to find if during 10 years period index dropped more than 25%.... and just in MERs you will pay 25-30% in 10 years, so IMHO who doesn't want take a risk, GIC is much better option.
and if you can manage to time your any index ETF by buying in during a particularly down market (like 2008 - 2009) and sell during a market top (like 2000). -> your return will be much higher...but key word here "magically"

There are still some segs with 100% guarantee. I did some 'training' at an insurance company last year and a couple of their segs offered a 100% option. I ended up deciding not to go ahead with the job though; I could not in good personal conscience present the vast majority of insurance products and their associated 'investments' to people. My friend got stung by one of these charlatans- a supposed 'friend' of 15 years who is now a "Financial Advisor!!" with a large insurance company. He basically hosed her and many more of his friends, coercing them to leverage huge amounts into things that tanked.

[gibor]

Can you give example of fund with 100% maturity guarantee? (link)
I just did such search in google and coudn't find any open fund with 100% maturity guarantee.....

btw, a lttle that 100% guarantee (usually 100% + o.5% annually) are Protected linked notes that usually mature in 3-5 years....however, upside is also limited

[indexxx]

Can you give example of fund with 100% maturity guarantee? (link)
I just did such search in google and coudn't find any open fund with 100% maturity guarantee.....

btw, a lttle that 100% guarantee (usually 100% + o.5% annually) are Protected linked notes that usually mature in 3-5 years....however, upside is also limited

http://www.hughestrustco.com/media/s...guarantee.html
http://www.empire.ca/consumer/invest...ated-funds/en/
http://www.mackenziefinancial.com/en...unds/seg.shtml
http://donnellyadvisors.com/investments/segregatedfunds

If I remember correctly, the company I was looking at working for (Inslink) had the Mackenzie funds.

[gibor]

http://www.hughestrustco.com/media/s...guarantee.html
http://www.empire.ca/consumer/invest...ated-funds/en/
http://www.mackenziefinancial.com/en...unds/seg.shtml
http://donnellyadvisors.com/investments/segregatedfunds

If I remember correctly, the company I was looking at working for (Inslink) had the Mackenzie funds.

When I was searching, I found exactly those links , but I'd like to see not this "propoganda", but real fund ticker so I can do research on it in globeinvestor or morningstar.....

[MoneyGal]

Summary of the academic research on how much the embedded guarantee of the seg fund should cost: https://secure.globeadvisor.com/serv...5/RFUNDSEGMN25

Quotes from the article:

Fortunately, someone has done the research on exactly how much the insurance part of a seg fund should cost. Moshe Milevsky, a finance professor at York University's Schulich School of Business, crunched the numbers using statistical models developed for options and determined that a fair price for a 10-year guarantee on an equity growth fund is an extra 0.45 percentage points in fees, or $45 a year on a $10,000 investment. Any more and you're probably getting ripped off; any less and you're getting a good deal.

For funds that hold bonds, the guarantee is worth a lot less, naturally, since the odds that a portfolio of bonds will lose money over 10 years is much lower than for stocks. An investor should pay no more than $13 extra per year on that $10,000 investment for a balanced fund, Mr. Milevsky says, and just $2 (or 0.02 percentage points) for a pure bond fund.

By his measures, many Canadian investors are paying much more than they should. Take the AIC Advantage Segregated Fund II, a guaranteed version of the popular mutual fund of the same name. The fund's holdings are exactly the same, but with a 100-per-cent guarantee, the cost rises to 5.79 per cent from 2.69 per cent. That extra bit of security costs more than $310 a year on $10,000, almost seven times Mr. Milevsky's "fair value."

[if you want to download the academic research I can point you to it, and it will provide the analytic framework for doing the same analysis]