Desjardins Financial Security is temporarily suspending the guarantee on some of its guaranteed investment fund products, the company has announced.

DFS said it would temporarily cease to offer the Guarantee 100/100 r on new Helios contracts effective May 8. Deposits for the guarantee, which offers clients 100% protection of their investment against market downturns and upon death, will not be accepted beyond May 8, the company said.

DFS explained that current sales are “considerably higher than the numbers that were originally forecast for 2009,” as investors seek to reduce their exposure to risk amid market volatility. This growth has amplified the issues concerning the management of risks and resources related to the Helios contract’s Guarantee 100/100 r, the company said.

As a result, DFS said it must focus on sound growth management and the sound management of any risks related to the product.

“The global economy has undergone dramatic shifts that have led most financial institutions to place a higher priority than ever on sound risk management, and DFS is no exception,” the company said in a memo.

But the company is still in “excellent financial shape,” DFS added.

After May 8, individuals holding the Guarantee 100/100 r who want to make changes to the composition of their fund may be required to do so manually in Desjardins offices rather than via Fundserv, Desjardins said.

Investors will still be able to make deposits into the company’s two remaining core guarantees, Guarantee 75/75 and Guarantee 75/100 i.

But the company warned that further changes to the Helios product are possible.

“We are closely monitoring market conditions and industry responses to ensure that our offer and continues to follow sound management practices while remaining competitive,” Desjardins said.

The company plans to inform clients of these Helios changes in a note that will be included in client statements at the time of the next mailing, which is scheduled for July 2009.

DFS