Which type of fund requires investors to hold investments for a specific period to qualify for guarantees?

Which type of fund requires investors to hold investments for a specific period to qualify for guarantees?

• A. Exchange-Traded Funds (ETFs)
• B. Segregated fund
• C. Open end mutual fund
• D. Money market fund

Answer: (B)

The option that requires investors to hold investments for a specific period to qualify for guarantees is the segregated fund. Segregated funds are a type of investment fund offered by insurance companies, and they come with certain guarantees, such as a minimum redemption value after a specified period, often referred to as a maturity guarantee. This means that if the investor holds the fund until the specified maturity date, they are assured that they will receive at least a certain percentage of their investment back, regardless of market conditions at that time. This unique feature encourages long-term investment and provides a level of security to investors, particularly during market volatility. Additionally, segregated funds may also offer death benefits, which allows the investor’s beneficiaries to receive a guaranteed amount upon the investor's death, as long as the conditions of the fund are met. In contrast, other types of funds, such as exchange-traded funds, open-end mutual funds, and money market funds, do not come with such hold requirements or guarantees. They can be bought or sold on a more flexible basis, which does not necessitate holding investments for a predetermined time to access guarantees.

The option that requires investors to hold investments for a specific period to qualify for guarantees is the segregated fund. Segregated funds are a type of investment fund offered by insurance companies, and they come with certain guarantees, such as a minimum redemption value after a specified period, often referred to as a maturity guarantee. This means that if the investor holds the fund until the specified maturity date, they are assured that they will receive at least a certain percentage of their investment back, regardless of market conditions at that time.

This unique feature encourages long-term investment and provides a level of security to investors, particularly during market volatility. Additionally, segregated funds may also offer death benefits, which allows the investor’s beneficiaries to receive a guaranteed amount upon the investor's death, as long as the conditions of the fund are met.

In contrast, other types of funds, such as exchange-traded funds, open-end mutual funds, and money market funds, do not come with such hold requirements or guarantees. They can be bought or sold on a more flexible basis, which does not necessitate holding investments for a predetermined time to access guarantees.