With-Profits comes into its own

There is nothing like a stock market crash/adjustment/correction to remind everyone that the value of investments can plummet as well as rise.

With-profits funds offer a unique insulation in volatile investment conditions when the concept of long term smoothing really comes into its own. We have been highlighting over the past few months how the strong recovery in with-profits funds has only just started to be passed on to policy owners and how this investment lag offers significant potential for future growth. With markets crashing around us though, it is worth remembering that this strong recovery has also created a huge increase in reserves that should allow, in particular, the stronger life offices to smooth investment returns through a period of volatility and uncertainty.

Even if stock markets do not manage to fully recover by the end of the year we would expect that the reserves built up over the last few years would be used to smooth returns and so avoid the jolts being experienced by virtually every other investment product.

Another point to consider is the make up of a with-profits fund. The three way mix of equities, property and bonds is designed to provide a counter balance and so as stock prices fell earlier this week we saw a corresponding increase in bond prices. This balancing act provides reassurance to investors in difficult times.

The two aspects highlighted above are most prominent in the stronger with-profits funds and it is these offices that the Endowment Growth Fund has carefully selected over the past 9 years to provide strong long term growth prospects with an underlying reassurance that is so valuable in uncertain times.

January 24th 2008

EGF is only suitable for professional investors who understand the risks involved and investment should not be made prior to reading the prospectus. If in doubt seek expert advice. Nothing contained within this document constitutes investment advice or an offer to subscribe.