Key Takeaways
- • CDSPI topped segregated fund performance in 2024 for the second consecutive year, with 88.9% of its $797.7 million AUM ranked in the first or second quartile by Morningstar Direct, significantly outpacing competitors.
- • Investors Group ranked second (72.2% in top two quartiles), followed by RBC Insurance (69.7%), while larger players Manulife Investment Management ($36.5 billion AUM) and Canada Life's three brands ($29.8 billion combined AUM) underperformed with only 40.1% or less of assets in above-average funds.
- • The Magnificent Seven technology stocks—Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta, and Tesla—drove equity gains across the market, with the S&P 500 rising 23% in 2024; funds lacking exposure to these names significantly underperformed.
- • Larger seg fund families prioritizing diversification for risk management, such as Manulife, were disadvantaged in 2024's concentrated tech-driven rally, with head of product Sanjiv Juthani noting that "diversification is key to minimizing downside risk."
- • GWL, London Life, and Ivari segregated funds are closing to new investors and will only continue through existing contract terms, reflecting structural changes in the seg fund market.
Summary
Segregated funds delivered strong returns in 2024 despite significant performance dispersion across fund families, driven predominantly by concentrated exposure to the Magnificent Seven technology stocks. The S&P 500's 23% gain and solid fixed-income returns created a rising-tide environment, but winners and losers emerged based on tech positioning. Fixed-income assets also rebounded after years of suppressed returns due to elevated interest rates.
CDSPI, a small dental not-for-profit with $797.7 million in AUM, dominated the seg fund landscape for the second straight year, with 88.9% of assets ranking in the first or second quartile according to Morningstar Direct—a commanding lead over peers. Investors Group followed at 72.2% in top-quartile assets, with RBC Insurance third at 69.7%. Four additional families maintained solid performance between 62.2% and 65.3%, including Industrial Alliance Investment Management, which managed $29.7 billion as of December 31, 2024.
The market's performance leaders faced a starkly different outcome. Manulife Investment Management, managing $36.5 billion, and the three Canada Life brands combined (Canada Life, Great-West Life, and London Life totaling $29.8 billion), lagged significantly with 40.1% or less of AUM in above-average performing funds. The divergence directly correlated with exposure to the Magnificent Seven: Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta, and Tesla. Firms including Manulife, the Canada Life suite, and value-focused Empire Life underperformed due to insufficient technology weighting, while externally managed CDSPI funds benefited from appropriate Magnificent Seven positioning.
Industry leaders acknowledge the tension between 2024's performance outcomes and seg fund risk management mandates. Sanjiv Juthani, Manulife's head of product management, stated that "diversification is key to minimizing downside risk," reflecting the structural orientation of larger seg fund platforms toward broad-based portfolio construction rather than concentrated bets. This defensive positioning proved costly in a year dominated by mega-cap tech outperformance.
Market structural changes are underway: GWL, London Life, and Ivari segregated funds are no longer accepting new investors and will operate only through the duration of existing customer contracts, signaling industry consolidation and declining appetite for new seg fund deployment among major insurers.
CDSPI, a small dental not-for-profit with $797.7 million in AUM, dominated the seg fund landscape for the second straight year, with 88.9% of assets ranking in the first or second quartile according to Morningstar Direct—a commanding lead over peers. Investors Group followed at 72.2% in top-quartile assets, with RBC Insurance third at 69.7%. Four additional families maintained solid performance between 62.2% and 65.3%, including Industrial Alliance Investment Management, which managed $29.7 billion as of December 31, 2024.
The market's performance leaders faced a starkly different outcome. Manulife Investment Management, managing $36.5 billion, and the three Canada Life brands combined (Canada Life, Great-West Life, and London Life totaling $29.8 billion), lagged significantly with 40.1% or less of AUM in above-average performing funds. The divergence directly correlated with exposure to the Magnificent Seven: Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta, and Tesla. Firms including Manulife, the Canada Life suite, and value-focused Empire Life underperformed due to insufficient technology weighting, while externally managed CDSPI funds benefited from appropriate Magnificent Seven positioning.
Industry leaders acknowledge the tension between 2024's performance outcomes and seg fund risk management mandates. Sanjiv Juthani, Manulife's head of product management, stated that "diversification is key to minimizing downside risk," reflecting the structural orientation of larger seg fund platforms toward broad-based portfolio construction rather than concentrated bets. This defensive positioning proved costly in a year dominated by mega-cap tech outperformance.
Market structural changes are underway: GWL, London Life, and Ivari segregated funds are no longer accepting new investors and will operate only through the duration of existing customer contracts, signaling industry consolidation and declining appetite for new seg fund deployment among major insurers.
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