As with all investments though, choosing which company to invest with can make a large difference.
The best and worst performers produced significantly different returns resulting in payouts in excess of £3,000 more or less than the average.
While many with-profits funds have closed to new business, there are several well-known names with significant funds which continue to attract significant volumes of new with-profits business.
Around £4bn and £5bn on new single premium with-profits business has been written each year for the past three years, with one company responsible for more than 2/3rds of those sales. The mutual sector, as would be expected from the movement that gave us the with-profits concept originally, is also well-represented here.
With-profits products retain popularity in certain areas of the market. With their access to a wide range of diverse investments, the smoothing mechanism and greater transparency, they remain very well-placed for cautious investors looking to invest over the medium to long term.
Tim Bateman is a life actuarial partner at Mazars
| Key Points |
The with-profits concept provides investors with the potential to invest in a wide range of assets. With-profits business was extremely popular through the 1980s and into the 1990s. Recent payouts on single premium investment bonds show that there are some with-profits funds giving quite presentable returns. |
