LLQP Segregated Funds & Annuities · Component 2.1 · 30% of the exam
A conservative client's portfolio of segregated funds would typically emphasize:
- ASector funds in defensive industries such as utilities, since those sectors fall least in downturns
- Fixed income and money market with modest equity, or a conservative portfolio fund
- CEmerging market equity with a 100/100 guarantee, since the guarantee removes the downside
- DA leveraged position in balanced funds, so a small amount of capital works harder
Correct answer: B) Fixed income and money market with modest equity, or a conservative portfolio fund
Fund types map to profiles. Conservative profiles favour income and stability, with guarantees as an added comfort.
Why the other options are wrong
- ASector funds carry concentrated risk unsuited to a conservative profile.
- CEmerging market equity is the most volatile category; a guarantee does not change interim risk.
- DLeverage magnifies risk.
Exam tip
Conservative: fixed income heavy, modest equity, stronger guarantee.
Common mistake
Over-allocating to equity for a conservative profile because 'the guarantee protects them'.
What this tests
CISRO competency component 2.1 — Analyze the available products that meet the client's needs — which is weighted at 30% of the Segregated Funds & Annuities module. Written against the published curriculum.
More from component 2
- A segregated fund's 'guaranteed amount' after a partial withdrawal under proportional reduction is:
- A distinctive estate advantage of a segregated fund over a non-registered mutual fund held jointly with a child is:
- Segregated fund guarantees are most valuable relative to their cost when:
- A segregated fund's annual statement reports:
- Compared with a segregated fund, an exchange-traded fund (ETF) generally offers:
- A segregated fund's 'automatic death benefit reset' feature:
Practice the whole Segregated Funds & Annuities module
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