Guaranteed investment funds, as the name implies, guarantee that some or all of the capital invested will be preserved at a future date. In some cases, a guaranteed return is also offered.

Key concepts

  • Guaranteed Maturity Date: date in the future on which the fund’s units are guaranteed to reach a certain net asset value (guaranteed NAV). Only unitholders who hold their investment until the maturity date are entitled to the guarantee. If it is redeemed before that date, losses may occur.
  • Guarantor: an entity that undertakes to contribute the amount necessary for the unitholder to retain his initial investment if the guaranteed NAV is not reached as a result of the performance of the guaranteed mutual fund’s portfolio. If this amount is paid directly to the fund, it is an internal guarantee; if the unitholder receives this amount, it is an external guarantee.
  • Marketing period: period during which units of a guaranteed fund can be purchased without paying subscription fees.
  • Liquidity windows: some guaranteed funds provide for predetermined dates on which the unitholder can redeem all or part of the fund without paying redemption fees. This requires compliance with the notice periods set out in the prospectus. As these redemptions are made at the net asset value on that date, the guarantee does not apply and may result in losses.

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Types of guaranteed investment funds

Depending on the scope of the guarantee, two types can be distinguished:

  • Fixed-income guarantees: at maturity, the guarantees ensure not only the preservation of the initial capital, but also a fixed and predetermined return (indicated in the prospectus in the form of annual interest, APY).
  • Guaranteed variable return: they only guarantee the initial investment, on the maturity date of the guarantee. They also offer the possibility of receiving a return linked to the evolution of various financial assets or indexes (according to more or less complex calculation formulas). Investors should note that if the underlying instruments do not perform as expected, they may not receive any return.


What to do if the warranty expires

The unitholder should pay attention to the expiration date of the guarantee (which appears in the fund’s prospectus and in the periodic information sent to the unitholder), because at that time he must assess the situation and decide what to do.

In some cases, a new guarantee period will be established or will begin after the expiration of the guarantee for these products, which implies significant changes in their nature and characteristics. In other cases, the fund may cease to be a guaranteed fund and continue to operate normally with a different investment policy.

Finally, it is also possible that a fund may be absorbed by another fund as part of a merger process when the guarantee expires.

Investors have the following options:

  • Do not accept the new conditions: in this case, the participant must exercise the withdrawal right, which allows him to recover his investment or transfer it to another fund without incurring redemption fees for a limited period of time (at least one month). This period is specified in the letter sent by the institution.
  • Remaining a fund participant: this option does not require any action, since if the investor does not submit a redemption order during the period available for decoupling, he is deemed to have accepted the new features (or, as the case may be, the features of the acquiring fund) and wishes to maintain his investment. Thereafter, the new terms and conditions (which may include, for example, the application of a redemption fee) will apply to the participant.


What should be taken into account for this type of fund?

  • In general, guaranteed funds do not always guarantee the investment, but only on a certain date: the maturity date of the guarantee.
  • Not all guarantee the return. Before investing, check whether the guaranteed investment fund offers a fixed and secure return or whether it only guarantees the initial investment.
  • If you decide to invest in a guaranteed fund,we recommend that you invest during the marketing period, and if you wish to redeem, do so during the expected period after the guarantee expires, or take advantage of the moments without redemption fees (liquidity windows) throughout the life of the product.
  • Guaranteed funds typically charge high subscription and redemption fees during the guarantee period to limit inflows and outflows (except during liquidity windows).
  • Redemptions made during the liquidity window are not covered by the guarantee. Although they are exempt from redemption fees, they may result in losses.
  • Be sure to read the product prospectus for information on the marketing period, guarantee expiration date, performance objective, fees, liquidity period, notice period, etc. It is important to read it both before investing and after becoming a participant.
  • It is important to carefully study the communications sent by the institution regarding the maturity and renewal dates of the guarantee.

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How is the profitability of the investment fund guaranteed?

Guaranteed structured investment funds are the only ones that guarantee a predetermined return (fixed or variable). Defined in the internal regulations. Other funds cannot guarantee performance.

Is it possible to guarantee the profitability of an investment fund?

It is not possible to guarantee the performance of an investment in units of investment funds, except in the case of «guaranteed structured investment funds», which guarantee a return at the end of a period defined in their internal regulations. This purpose must be explicitly stated in the «objective» defined by the fund. These funds must describe in detail in the investment policy contained in their internal regulations the investment strategy they will follow, the funds’ investment approach and the risk hedging strategy they intend to use to support the relevant performance objective.

What are the advantages and disadvantages of investing in a mutual fund?


– Allows participants to access a variety of global markets, economic sectors and currencies that would not be possible with individual investment due to the high transaction costs and/or volumes required to generate funds.
– Transaction costs and/or volumes required to create a diversified portfolio.
– Diversification helps reduce the potential negative impact of a given investment through a variety of instruments.
– Diversification helps reduce the potential negative impact of an investment due to the variety of financial instruments that mutual funds have access to.
– Liquidity for quick access to money. Funds will be redeemed on the dates established for each fund.
– Flexibility thanks to the broad categories of debt, equity, balanced and guaranteed funds. In addition, participants can choose between different funds with different investment strategies.
– Affordability, as mutual funds can be invested starting at $5,000.
– Convenience by entrusting investment management to a third party specialist who is dedicated exclusively to investment management.

– Convenience by entrusting investment management to a third party specialist who is dedicated exclusively to investment management.

– Affordability by entrusting investment management to a third party specialist who is dedicated exclusively to investment management.


– The profitability of investments in mutual funds is not guaranteed. Even in the case of debt (fixed income) funds, the result obtained upon redemption of the investment will not be known at the time of its effectiveness.
– There are a large number of funds and categories of mutual funds, which can lead to confusion.
– There are costs associated with the funds, which vary depending on the type of fund and the holding period of the investment.


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Can I know the return I will get from investing in a mutual fund?

No investment fund can predict or guarantee future returns, as they depend on the market values or prices of the financial instruments in which the fund’s assets are invested, except for so-called structured guaranteed funds.

No investment fund can predict or guarantee future returns, as they depend on the market values or prices of the financial instruments in which the fund’s assets are invested, except for so-called structured guaranteed funds.

Here’s a list of the best guaranteed mutual funds.

Here is everything you need to know about a guaranteed mutual fund, if this type of fund does not convince you, since despite its name, it does not guarantee profitability, the commissions are very high and the yield very low, do not hesitate to review all about mutual funds here.

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If you are looking to invest safely, chances are that you are looking for guaranteed mutual funds, currently it is very difficult to find these funds, since guaranteeing a return on investment in a 100% safe way is impossible, but it is true that many funds have an upward trend and constant for a long time.

With this book you will be able to find almost guaranteed mutual funds, you will learn how these work, what you have to take into account when joining one and what dangers may exist. Thanks to this book by Charlie Evans, you may be able to reduce your risk as much as possible.

I hope this article has been able to help you and that you get the most out of it!

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