Investing products

What is a Market-Linked GIC?

A Market-Linked Guaranteed Investment Certificate (GIC) is a term investment that combines the security of a GIC with the potential for higher returns based on stock market performance. Your principal amount is guaranteed, while the interest you earn is linked to the performance of a market index. If the market performs well, you may earn more interest. Market-Linked GICs are eligible for deposit protection through the Credit Union Deposit Guarantee, which protects eligible deposits if a Saskatchewan credit union is unable to meet its deposit obligations. 

A Market-Linked GIC can be held in a RRSP, TFSA or non-registered account and may be a good option if you’re looking to grow your savings while protecting your initial investment. It can be a fit for medium- to long-term goals if you’re comfortable leaving your money invested for the full term and want a balance between growth potential and security.

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Why choose a Market-Linked GIC?

Potential for higher returns

Returns are linked to market performance.

Market-Linked GICs are linked to the performance of the products, often referred to as the 'reference index' or 'benchmark'. When these perform well over the term, it can lead to higher returns for you.

Low maintenance investment

A hands-off way to invest.

For those that do not want to actively manage their portfolio, Market-Linked GICs offer a hands-off approach to investing.

Diversification

Exposure to stocks and the causes you value.

Market-Linked GICs can provide you with exposure to various products (like stocks), and also allow you to invest in things that you value most, like the environment or Canadian-specific companies.

How does it work?

Market-Linked GICs combine the security of a GIC with the potential for returns based on market performance. Your investment is non-redeemable and must be held until maturity. Interest is calculated based on the performance of the underlying investments, typically market indexes and benchmarks, over the term of the investment. The return you earn depends on how those markets perform, along with factors such as the type of Market-Linked GIC and the term length. 

At maturity, your original investment is guaranteed, and any interest earned based on market performance will be paid out. The cash value of your investment will then be moved into an account of your choosing. 

Not all Market-Linked GICs are the same. Conexus offers two options with different investment focuses to help you choose an option that aligns with your goals. Market-Linked GICs can be a complex investment, so it’s important to talk to an advisor to understand how they fit into your overall financial strategy.

Canadian Mix.

  • Non-redeemable and must be held until maturity.
  • This product has 3 year and 5 year term options available.
  • This investment is made up solely of Canadian companies and invests in currently 20 companies.
  • The capital you invest is 100% guaranteed when the investment comes due (after your term).
  • The investment is eligible within registered plans such as a TFSA or RRSP.
    • You can invest in a non-registered plan; however, the interest income will be taxed each year during the term.

Eco Mix.

  • Non-redeemable and must be held until maturity.
  • This product has 3 year and 5 year term options available.
  • This investment option invests in companies who care about the environment. Currently, the Eco Mix invests in 20 companies from economic sectors in Canada, Australia, Europe and the USA.
  • The capital you invest is 100% guaranteed when the investment comes due (after your term).
  • The investment is eligible within registered plans such as TFSA or RRSP.
    • You can invest in a non-registered plan; however, the interest income will be taxed each year during the term.

Is this right for you?

Right for you if: 

  • You're seeking balanced risk and reward. You want the potential for higher returns than other traditional investments but still value some level of protection (since your principal amount is guaranteed).
  • If you're interested in benefiting from market performance without directly investing in stocks or other securities. This way, you don't have to monitor how your stocks are doing, but you're still benefiting from the market index.
  • If you have a medium-term investment horizon and are comfortable with the specific terms and conditions of the Market-Linked GIC. If you're able to leave your money invested for the specified term, you'll maximize your potential return.

May not be right for you if you:

  • If you prioritize guaranteed returns and are risk averse. A traditional GIC or other term investment may be more suitable for you.
  • You don't have a good understanding of how the underlying products work or you're uncomfortable with potential market volatility. Market-Linked GICs don't provide guaranteed returns, so if your underlying products are performing poorly, you may receive little or no interest at the end of the term.
  • You need access to your funds before the maturity date of the Market-Linked GIC. They have a set maturity date, so withdrawing your funds before this may result in penalties or reduced returns.
FAQs

Common questions.

Here’s what people ask us the most.

The interest earned is linked to the performance of the underlying investments, typically market indexes or benchmarks, over the investment term. If the market performs well, you may earn more interest. If markets do not perform well, you may receive little or no interest at maturity, but your original investment is protected when the term ends.

Your original investment is guaranteed at maturity, meaning you won’t lose the amount you initially invested when the term ends. However, the interest earned is not guaranteed and depends on market performance.

Market-Linked GICs are non-redeemable investments and must be held until maturity. Conexus offers Market-Linked GIC options with 3-year and 5-year terms.

Market-Linked GICs are designed to be held until maturity. If you need access to your money before the end of the term, a Market-Linked GIC may not be the right option for you. Talk to an advisor about your options before investing.

A regular GIC provides a fixed interest rate, while a Market-Linked GIC provides the potential for higher returns based on market performance. Both provide protection for your original investment, but the return structure is different.

Have questions?

We're here to help.

Not sure which investment option is right for you? Our advisors can help you understand your choices, explore different options and create a plan that fits your goals and financial situation.

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Mutual funds, other securities and securities related financial planning services are offered through Aviso Wealth, a division of Aviso Financial Inc. Online brokerage services are offered through Qtrade Direct Investing, a division of Aviso Financial Inc. Qtrade and Qtrade Direct Investing are trade names and/or trademarks of Aviso Wealth Inc. and its subsidiaries. 

Unless otherwise stated, mutual funds, other securities and cash balances are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer that insures deposits in credit unions. Mutual funds and other securities are not guaranteed, their values change frequently and past performance may not be repeated. 

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