In the eighties and early nineties, with-profits investments were the investment of choice for many. Sadly, this optimism was not borne out in the returns of many funds. Nick Bladen takes a look at the market
A number of problems have beset with-profits funds in recent years. The need to provide for guarantees and its influence on asset allocation has meant that most funds have had to adopt defensive strategies. Bonus rates have followed a downward trend and market value reductions (MVRs) have significantly affected many funds. Numerous with-profits funds have closed to new business; figures from the Financial Services Authority (FSA) show that there are 51 firms that manage closed funds, out of a total of 99 that offer with-profits. Closed funds are estimated to have £85bn under management, com...
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