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The information below relates to the Engage Mutual with profits fund, and does not apply to the Engage Mutual ELL with profits fund.
our 2010 Engage Mutual with profits fund performance
Overall the Engage Mutual with profits fund returned 6.2% in the year.
The fund is managed on a cohorts basis. The current practice is to group policies together according to product type and the time period until the next guarantee date. An asset mix is then determined for each group of policies (or cohort) based on the amount of guarantees in relation to asset shares, and the time period until the next guarantee date.
The underlying investment performance in 2010 for individual cohorts ranged from 3.9% for those cohorts predominantly invested in gilts, to 7% for the highest performing cohort invested in more growth based assets.
It must be remembered that past performance is not a reliable indicator of future results.
See the current investment mix of the With Profits Fund.
investment returns and policy payouts
The groups of policies and the underlying asset mix are reviewed on a regular basis.
The investment return earned by the underlying assets of each group of policies is used in the asset share calculations. For each with profits policy, the asset share is its overall fair share of the value of the assets in the applicable underlying asset mix.
Policies with high levels of guaranteed benefits in relation to their asset share and which are close to the guarantee date are more likely to be invested in fixed interest investments.
This is intended to help protect policies near the end of their term from any major downturns that might occur when invested in higher risk/higher growth assets.
Policies where the guaranteed benefits are not such a constraint and/or have a longer period until the guarantee date are more likely to be in higher risk/higher growth based investments which have greater growth potential over the long term.
See the current groupings and asset mix for your policy.
Please note: past performance is not a reliable indicator of future results. Your investment may go down as well as up and you may not get back the full amount of your original investment.
what this means to individual policyholders
It is important to remember that the fund performance in any one year isn’t directly reflected in a customer’s policy, due to the smoothing process that is a feature of a with profits investment.
Investment returns achieved by the fund will vary over time and there will be periods when investments may do very well, but other periods when they may perform badly. The smoothing process holds back some of the fund growth from good years to help cushion against years where performance of investment markets may not be so good. In effect, it helps to smooth out some of the short term variations in performance.
To understand how this may affect the payout on policies invested into the with profits fund, please see our with profits fund Customer Friendly PPFM,which aims to explain in simple terms how we manage the fund in relation to different sorts of with profits policies. This should be read in conjunction with the fund’s current investment mix.
For holders of the protected investment bond and protected loyalty bond which invest into the Engage Mutual with profits sub fund, please see the with profits sub fund Customer Friendly PPFM which contains important information about how the protected investment bond and the protected loyalty bond work.
If you have any questions about your policy please contact our customer contact centre on 0800 169 4321†
