Westley and Rachel are planning to invest $10,000 into a segregated fund. They are considering two options:
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Question:
Westley and Rachel are planning to invest $10,000 into a segregated fund. They are considering two options: (1) CAD Canadian Growth Fund 75%/75%, or (2) CAD Canadian Growth Fund 100%/100%. All else being equal in terms of the investment mandate of the fund, portfolio, account type, client circumstances, etc., which of the funds is higher risk and why?
a) Fund (1) is higher risk because it is has longer longevity.
b) Fund (2) is higher risk because it is less diversified.
c) Fund (1) is higher risk because it has a higher risk of capital loss.
d) Fund (2) is higher risk because it is not covered under investor protection.
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