Insurance Advisory Service February 2013

Positive equity markets pushed segregated funds above $93 billion in January, an increase of 1.7% from the end of 2012. After three successive months of net inflows, segregated funds experienced net outflows of $210 million in January. This compared to outflows of $2 million in January 2012. The decrease in net flows resulted from a combination of increased redemptions and lower gross sales compared to December. After a year of changes, suspensions and GWB product closures, the market is left with dialled-down versions of the popular product. The pause in product changes and the resulting stripped-down versions of GWBs have begun to be reflected in reduced sales activity. As sales momentum wanes for GWBs, it will be interesting to see whether advisors are able to rediscover the risk management value proposition that has always been a part of segregated funds for the current demographic reality.