Manulife has launched four segregated index funds with exposure to BlackRock funds and three segregated funds managed by Fidelity Investments Canada, the insurer announced Wednesday.
The BlackRock Asset Management Canada funds offer a passive indexing strategy for cost-conscious investors as they have a lower management expense ratio than traditional seg funds, Paul Savage, head of individual insurance at Manulife, said in an interview. Meanwhile, the Fidelity funds are for clients who want to capitalize on growth in sectors like AI, which is part of the innovators fund.
When interest rates were high and the market was volatile, investors were interested in fixed-income products like bonds, money-market funds and guaranteed investment certificates, Savage said. But high market volatility with falling policy rates drove interest in seg funds.
“People are looking for and starting to realize and understand the benefits that seg funds provide, allowing clients to invest in equity markets and things that would traditionally be considered higher risk while still having those downside guarantees and protections,” Savage added.
The BlackRock segregated index funds are Manulife BlackRock Canada Universe Bond Index Fund, Manulife BlackRock Canadian Equity Index Fund, Manulife BlackRock U.S. Equity Index Fund and Manulife BlackRock International Equity Index Fund.
The Manulife Fidelity global segregated funds are Manulife Fidelity Global Balanced Fund, Manulife Fidelity Global Growth Fund and Manulife Fidelity Global Innovators Fund.
The seven new seg funds are available with a 75% maturity benefit guarantee and a 75% or 100% death benefit guarantee. The funds are also available in a registered education savings plan (RESP).
The death benefit guarantee and the ability to name a successor subscriber are features suitable for RESPs, Savage said. For example, a grandparent funding an RESP for their grandchildren could name a parent as a successor subscriber on the grandparent’s death.
The seg funds are available in all registered accounts offered by Manulife, but Manulife doesn’t offer the first home savings account yet.
“First home savings is something that we’re looking at,” Savage said. “It’s been a question of demand and utilization, and it’s something that we’re keeping an eye on to decide if it makes sense for us to offer in the future.”