With-profits overview

In this type of investment, you and other fund investors share in the profits and losses of the fund you’re invested in. Each fund makes profits and losses from its investments. Funds can also make profits or losses because the amount paid to those who leave early may not be exactly equal to their share of the underlying assets. This may be because of smoothing or the effect of guarantees.

When you invest in a with-profits fund, your money is combined with the money of other investors in the same fund. This ‘pooling’ of investments generally means you have access to a wider range of assets (such as shares, bonds and property) than if you’d invested on your own. It can also help spread the risk and costs.

Different types of with-profits funds share out the profits and losses in different ways.

Traditional and unitised with-profits funds use a system of yearly bonuses with final bonuses or market value reductions (MVR) when you withdraw money. There may be guarantees, at certain points of time, of what you get back although usually there are no guarantees about future bonuses.

Our new generation with-profits funds work in a different way. There are no guarantees and no concept of bonuses under these funds. We calculate a smoothed unit price daily for each fund. The value of your investment then depends on the price of the units you hold, although we may apply final adjustments, which can be up or down, when you withdraw money. This applies to all investors and is simply meant to ensure that everyone gets their fair share of the profits or losses experienced by the fund. We don't guarantee the amount you'll get back in the future from the new generation with profits funds. This is because it depends on the performance of the underlying investments and any smoothing increases or reductions we apply.

Find out about smoothing.