With-Profits Investment

Many people have invested in with-profits funds over the years. When markets are down, with-profits fund managers often exercise something called a Market value reduction (MVR). This is essentially a penalty
for those withdrawing money from the fund. The purpose of an MVR is to reflect the underlying fall in values and to protect those who remain invested in the fund.

At times like this it is often best to sit tight until the markets recover and the MVR is withdrawn. However, sometimes there is a window of opportunity to withdraw capital without a penalty even while an MVR applies.

With-profits funds were very popular 10 years ago. For this reason, many policy holders are reaching their 10 year anniversary. It is a little known fact that some providers permit MVR free withdrawals at the 10 year anniversary. For example, in October 2009, Aviva announced that this would apply to 33000 of their investment bond policyholders during the year.

This is a good example of why it is important to take advice not only when making a new investment, but also to review existing plans to see what improvements can be made.

If you think you would benefit from some investment advice, please contact Barry Sears at Professional Wealthcare.

This article is intended for guidance and is not advice.