What is the maximum amount of investor protection available for mutual fund investors in case of dealer insolvency?

In Canada, mutual fund investors benefit from a specific level of protection in the event of dealer insolvency, often termed as the "Investor Protection Fund" or "SIPC" in some contexts. The correct answer indicates that the maximum amount of investor protection is set at $1 million. This level of protection applies to the total accounts a client holds across multiple mutual funds and other securities, providing assurance that investors can recover their assets or funds if their investment dealer goes bankrupt or faces financial difficulties.

This protection is crucial because it helps to boost investor confidence in the mutual fund sector, encouraging individuals to invest knowing there is a safety net in place. The $1 million cap is determined based on regulatory standards that aim to protect a substantial portion of an investor's holdings while also managing the risk exposure for the protection fund itself.

Other amounts mentioned, such as $100,000, $500,000, and $2 million, either do not align with the current regulatory framework or exceed the limits set to balance protection for investors with the viability of the fund. Understanding these limits is essential for anyone involved in mutual fund investing or compliance within the financial industry.