Fund Spotlight: MD Stable Income Fund

MD Stable Income Fund is ideal for risk-averse investors with a mid- to long-term investment horizon.

MD Stable Income Fund (MDSIF) is a fixed-income solution that can add stability to an investment portfolio and offers greater flexibility than other fixed-term investments such as guaranteed investment certificates (GICs). MDSIF has the ability to bypass probate when there is a named preferred beneficiary, and investors may benefit from creditor protection.

How is MDSIF designed?

MDSIF is an insurance-based investment issued by MD Life Insurance Company. It provides mid- to longer-term investors with a stable, flexible and high-quality portfolio that includes bonds and mortgages.

MDSIF accrues interest daily and credits investors with monthly interest in the form of additional fund units. Although the level of monthly income is not guaranteed, MDSIF’s stable structure and conservative asset mix make significant fluctuations unlikely.

Benefits at a glance

  • Offers a unique fixed-income alternative to complement a diversified portfolio.
  • As a segregated deferred group annuity, it protects investors if the insurer fails.
  • May offer creditor protection.
  • Ensures assets are ultimately paid to valid designated beneficiaries.
  • As an actively managed portfolio, it generates monthly income that is distributed as new units and reinvested in MDSIF.

What makes MDSIF stable? It has a number of stabilizing features that protect asset values for longer-term investors.

Unlike mutual funds, which are market-value-based, MDSIF is a book-based fund that offers more stable returns and is less sensitive to changes in interest rates. Stable returns are achieved by amortizing the investments over their term and by actively managing the yield terms within the fund. As a result, the daily book value does not change to reflect daily market and interest rate swings. The price remains fixed at $10 per unit.

With MDSIF, interest income is allocated and accrued daily and reinvested monthly in the form of additional units (income distributions).

MDSIF’s unique book-value-based accounting is the foundation for its stable returns, protecting the capital preservation and income needs of all investors.

  • Market value adjustment (MVA) is a stabilizing feature that continuously compares the book value of the MDSIF investment portfolio with its market value. When book value exceeds market value, an adjustment may be applied on withdrawals from MDSIF.
  • High withdrawal activity (HWA) also protects the value of the MDSIF investment portfolio. It is triggered when withdrawals from MDSIF exceed 7% of total assets over three consecutive months. The HWA applies further controls on withdrawals, which safeguards MDSIF’s assets.

The majority of the portfolio is invested in high-quality bond and mortgage investments:

  • Bonds. In-depth analysis is conducted to maximize yield by investing in well-diversified and risk-managed domestic investment-grade, foreign and high-yield bonds.
  • Mortgages. These are selected using a balanced approach for generating income and maintaining desired risk exposures (e.g., credit quality and loan-to-value).

MD Stable Income Fund Buyer’s Guide: Important Information Before You Purchase MD Stable Income Fund

As part of our commitment to service excellence, MD Financial Management (MD) is introducing a Buyer’s Guide for MD Stable Income Fund (MDSIF).

Before you make a new or additional purchase of MDSIF, MD is required to deliver the most recent version of the MDSIF Buyer’s Guide for your review. This document provides key information about MDSIF that is relevant to your investment decision and will help you make a more informed decision when considering your overall investment strategy; you will be asked to acknowledge that you have received and reviewed the MDSIF Buyer’s Guide. Complete details can be found in the MD Stable Income Fund Certificate.

If you have questions about MDSIF’s features and benefits, please contact your MD Advisor or the MD Trade Centre at 1 800 267-2332.

If you are looking for investment security and potentially higher returns than from a short-term bond or GIC, MD Stable Income Fund might be the right choice for you. Your MD Advisor can help you determine the right mix of investment solutions for your portfolio, based on your personal needs and objectives.

See MD Stable Income Fund details.

Contact your MD Advisor today.