UK with-profits funds: investment performance and strategy 2020

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Now in its seventh year, our with-profits investment performance and strategy report is available to download.
More funds than ever before have participated in our annual investigation into the investment strategies of UK with-profits funds. Covering over £226bn of assets spread over 65 funds from 27 insurers, our analysis is the largest and most comprehensive of its kind.
 
 

Key findings

 
2019 was a good year for investment returns, with the median fund achieving in excess of 10% and many funds outperforming benchmark indices. A key determinant of relative performance has been equity allocation, with the better performing funds having a higher equity allocation.
 
Although every fund achieved a positive return over 5-years, not many outperformed benchmark returns over a 5-year horizon. This may suggest that firms would be better investing in lower cost index trackers rather than seeking active management.
 
On both a 1-year and a 5-year horizon, we continue to see a general trend of larger funds performing better than smaller funds. Larger funds will typically have a wider range of assets and benefit from economies of scale.
 

Box plot of distribution of 1-year net returns by size of fund.

In terms of strategic allocation changes, funds have generally changed little, although we have seen a shift from government bonds towards corporate bonds, which may be an indication of funds trying to search for yield within fixed interest assets. 

Box plot of distribution of asset allocation by asset class.

As a contributor, we are giving you secure online access to an interactive dashboard, which lets you simply undertake your own benchmarking investigations across a variety of periods.

If you already have a login to our secure BWebstream platform, then you can already access the results by clicking this link. 

If you would like additional colleagues to have secure access to this dashboard, then please let us know their email addresses and phone numbers by emailing withprofitsinvestmentsurvey@barnett-waddingham.co.uk.