Insurance Advisory Service August 2012

July saw segregated fund assets grow 0.3% to $88 billion,in line with market valuations. Overall growth in segregated funds was aided by a 1.1% increase in guaranteed withdrawal benefits (GWBs). Despite a subdued month in terms of asset growth,GWBs continued to be the contributing factor in the expansion of total segregated funds. The growth of GWB assets and strong sales indicate that even the dialled-down versions of the product resonate with clients seeking guaranteed income. Meanwhile,existing GWB policyholders appeared to appreciate what they have in hand as redemption levels remained low. Where segregated funds were concerned,investors once again avoided equity,particularly Canadian equity,while share of fixed income assets continued to rise. At the end of July 2012,the share of fixed income assets was 11.7% compared to 11.0% at December 2011. Within fixed income,Canadian bond funds were the major contributor to the absolute growth of the asset class,while foreign bonds had the highest growth rate.