The Scottish Widows £17bn With-Profits fund returned 5% to customers last year, half its 2006 return.
However, the provider says the fund performed well in volatile markets following the sub-prime mortgage crisis.
Kevin Doerr, with-profits actuary at Scottish Widows, says: “This reflects the diversified underlying asset mix and smoothing, which is an important feature of with-profits policies”
The provider raised the fund’s exposure to UK equities to 44% at December 31 2007 from 43% in 2006. Meanwhile, 31% of the fund was invested in fixed interest, up from 29% in 2006, and 10% in property, down from 12% in 2006. The fund invested 8% in non-UK equities, down from 10% the year before, and 8% in other investments, up 3% from 2006.
Scottish Widows has also added a regular bonus to 441,000 unitised and 239,000 conventional with-profits policies.
A 25-year £50 a month mortgage endowment will pay £38,136, £4,825 above the provider’s target, while a 20-year £200 a month personal pension will pay £97,328.
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