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Fund Spotlight: MD Stable Income Fund

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.

Pricing

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.

Interest credited daily

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

Withdrawal terms and restrictions

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.

High-quality investments

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).

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.