Funds
Investment Funds
FundEX Investments Inc.
Mutual Fund Dealership
Visit FundEX Investment Inc.'s website
Our mutual fund business is placed through FundEX Investments Inc. to the various mutual fund companies. FundEX Investments Inc. does the account keeping on our behalf and provides client information on demand for the client or our firm. FundEX Investments Inc. is responsible for all aspects of compliance as required by the Ontario Securities Commission and the Mutual Fund Dealers Association of Canada.
FundEX was founded in 1995 as a privately owned mutual fund dealer. Since then, they have grown to become Canada’s largest flat-fee dealer with over 500 independent financial advisors nationwide and $11 billion in assets under administration.
FundEX is subsidiary of Industrial Alliance Insurance and Financial Services Inc. Founded in 1892, Industrial Alliance is a fully integrated wealth management company serving more than 2 million clients across North America. With over $46 billion in assets, Industrial Alliance ranks among the 100 largest public companies in Canada. Industrial Alliance stock is listed on the TSX under the ticker symbol IAG.
Mutual Funds
Pool of Money
When you invest in a mutual fund, you are actually pooling your money together with that of many other people. A professional investment manager takes that pool of cash and invests it for the whole group into a variety of investments which could include stocks, bonds or other securities. If the manager’s choices of investments make a profit, you share that profit on a proportionate basis with everyone else in the group. If the investments lose money, everyone proportionately shares in the loss.
Objectives
Every mutual fund has an investment objective. For example, some funds hold investments designed to pay periodic income, while others hold growth investments which are designed to increase in value over time. Some funds invest in specific industrial sectors or certain geographical areas, while others invest quite broadly. There are over 1,300 funds available in Canada with varying objectives. The investment objectives of a particular fund are one of the most important considerations in deciding which fund you should buy.
Net Asset Value Per Share
When you invest in a fund, you receive units or shares of that fund. A mutual fund’s unit value is described as the net asset value per share (NAVPS). The NAVPS is calculated by taking the total market value of the fund, less its liabilities, and dividing by the number of units outstanding. For example, if a fund is worth $10 million (assets less liabilities) and has one million units outstanding the NAVPS will be $10. If you own 10 units your investment is worth $100.
Owning Units
When you buy units or shares of a mutual fund you effectively buy a portion of the fund’s assets. Owning a unit of a mutual fund means you effectively own a portion of each of the securities the mutual fund invests in – along with everyone else who holds that fund’s units. The fund company keeps track of your investment by recording how many units you own. The more money you put into a mutual fund, the more units you own. The price of a unit of a mutual fund usually changes every day, reflecting the change in the value of the fund’s investments. When the fund’s investments are doing well, the price of a unit goes up. When the investments aren’t doing as well, the unit price goes down.
Buying and Selling
Most mutual funds are open-ended investment funds. With an open-ended fund, new units are continuously made available for purchase from the mutual fund itself at a price equal to the NAVPS. Mutual funds also allow investors to redeem their units (sell them back to the fund) on demand.
Segregated Funds
Segregated funds and mutual funds are similar in many ways but do have some differences:
Each segregated fund is a pool of assets owned by an insurance company. Each pool of assets is kept separate or "segregated" from other assets owned or managed by that insurance company. Investors do not own units of the fund. Rather, they buy an insurance contract called an Individual Variable Insurance Contract that offers them the opportunity to buy one or more segregated funds. The investor doesn't buy units of the fund. they pay premiums to the insurance company based on the value of the fund when he is buying. They also doesn't sell units of their fund. Instead the insurance company returns their premiums based on the value of the investments in the fund.
The end result is the same for an investor in a segregated fund or mutual fund: They get liquidity when they require it.
Segregated funds have several features that are not available in mutual funds (with very few exceptions).
The insurance company guarantees that if an individual holds an investment in a segregated fund for 10 years he or she will get the higher of market value, or depending on the specific policy, 75% or 100% of the investment on the maturity date. This is called the maturity guarantee.
The insurance company will also pay a death benefit guarantee if the annuitant (the person who is insured under the contract) dies before the maturity date.
There are also several options available that will guarantee up to a notional 5% bonus every year for up to 15 years during the accumulation stage, as well as a 5% lifetime income guarantee. These guarantees ensure some growth and lifetime income even when markets show negative returns.
As insurance policies, which name specific beneficiaries, segregated funds may also offer creditor protection. This feature makes them the choice of many business people and professionals who may have high exposure to personal liability. However, they may not be "creditor proof" if they are purchased after a financial problem develop and are purchased in anticipation of litigation or bankruptcy.
They are also excluded from probate that can lead to significant savings in some provinces and make segregated funds an important consideration in estate planning.
Investors should note the costs involved in obtaining these added features. At the present time, management expense ratios or MERs of segregated funds are generally higher than comparable equity funds. As well, insurance companies have the right to change the management fee they charge with 90 days notice.