Key Takeaways
- • CDSPI dominates seg fund performance: The small dental not-for-profit seg fund family achieved 88.9% of assets under management in first- or second-quartile Morningstar-ranked funds in 2024, marking the second consecutive year at the top with $797.7 million in AUM.
- • Magnificent Seven exposure critical to 2024 returns: Seg fund performance was heavily dependent on exposure to Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta, and Tesla; families lacking healthy exposure to these tech giants, including Manulife Investment Management and Canada Life brands, significantly underperformed.
- • Investors Group and RBC Insurance follow CDSPI: Investors Group ranked second with 72.2% of AUM in above-average performing funds, followed by RBC Insurance at 69.7%, while larger families struggled with only 40.1% or less of AUM in first- or second-quartile funds.
- • Broader equity market strength offset concentration risk: The S&P 500 gained 23% in 2024, and fixed income delivered solid returns after years of low rates, yet diversification failures among larger seg fund families highlighted the concentration risk of underweighting the Magnificent Seven.
- • Scale did not guarantee performance: Larger families such as Manulife Investment Management ($36.5 billion AUM) and the three Canada Life brands ($29.8 billion combined AUM) trailed significantly, demonstrating that asset size alone does not ensure competitive fund rankings or investor outcomes.
Summary
Segregated funds delivered strong performance in 2024, riding broad equity market gains as the S&P 500 advanced 23% and fixed income recovered from years of depressed returns. However, performance divergence among seg fund families was stark, driven primarily by differential exposure to the Magnificent Seven technology stocks—Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta, and Tesla.
CDSPI, a small dental not-for-profit seg fund provider with $797.7 million in AUM, achieved the strongest performance among families with $500 million or more in assets, placing 88.9% of its AUM in funds ranked in the first or second quartile by Morningstar Direct. This represents the second consecutive year CDSPI dominated the rankings by a wide margin. Investors Group followed in second place with 72.2% of AUM in above-average performing funds, while RBC Insurance ranked third at 69.7%. Four additional seg families—including Industrial Alliance Investment Management, which managed $29.7 billion in AUM—captured between 62.2% and 65.3% of their assets in top-performing funds.
The larger seg fund families faced more significant headwinds. Manulife Investment Management ($36.5 billion AUM), the three Canada Life brands combined ($29.8 billion AUM)—Canada Life, Great-West Life, and London Life—and value-focused Empire Life all managed to place only 40.1% or less of their assets in first- or second-quartile performing funds. This underperformance directly correlates with insufficient exposure to the Magnificent Seven during a year when these technology giants dominated market gains.
Industry experts emphasized that diversification remains essential for risk management within seg fund structures. Sanjiv Juthani, head of product management at Manulife, highlighted that "diversification is key to minimizing downside risk," reflecting the sector's ongoing commitment to risk-balanced approaches. However, 2024 demonstrated the tension between diversification principles and market concentration—those families that failed to maintain adequate Magnificent Seven exposure suffered material performance gaps relative to better-positioned competitors.
Several seg fund families have restricted new investor access. Great-West Life, London Life, and Ivari funds will continue only for the duration of their current contracts, reflecting industry consolidation pressures and changing product strategies in the segregated fund market.
CDSPI, a small dental not-for-profit seg fund provider with $797.7 million in AUM, achieved the strongest performance among families with $500 million or more in assets, placing 88.9% of its AUM in funds ranked in the first or second quartile by Morningstar Direct. This represents the second consecutive year CDSPI dominated the rankings by a wide margin. Investors Group followed in second place with 72.2% of AUM in above-average performing funds, while RBC Insurance ranked third at 69.7%. Four additional seg families—including Industrial Alliance Investment Management, which managed $29.7 billion in AUM—captured between 62.2% and 65.3% of their assets in top-performing funds.
The larger seg fund families faced more significant headwinds. Manulife Investment Management ($36.5 billion AUM), the three Canada Life brands combined ($29.8 billion AUM)—Canada Life, Great-West Life, and London Life—and value-focused Empire Life all managed to place only 40.1% or less of their assets in first- or second-quartile performing funds. This underperformance directly correlates with insufficient exposure to the Magnificent Seven during a year when these technology giants dominated market gains.
Industry experts emphasized that diversification remains essential for risk management within seg fund structures. Sanjiv Juthani, head of product management at Manulife, highlighted that "diversification is key to minimizing downside risk," reflecting the sector's ongoing commitment to risk-balanced approaches. However, 2024 demonstrated the tension between diversification principles and market concentration—those families that failed to maintain adequate Magnificent Seven exposure suffered material performance gaps relative to better-positioned competitors.
Several seg fund families have restricted new investor access. Great-West Life, London Life, and Ivari funds will continue only for the duration of their current contracts, reflecting industry consolidation pressures and changing product strategies in the segregated fund market.
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