Helping you understand your fund values

My fund values have changed significantly – why wasn’t I warned about this?

We explain in our letters, and on our website, that fund values can go down as well as up. We also include your current value whenever we send an annual statement. Similarly, if you’re registered for ReAssure Now, you can logon whenever you want and check on your policy’s current value, and the value of the funds you’re invested in.

What are the main things that can affect a fund’s value?

The things most likely to have an effect on the value of your policy are market conditions, the type of funds you’re invested in and the charges you pay.

How does the type of fund I’m invested in affect my policy’s value?

Funds can be invested in a range of assets, like equities (also known as stocks or shares), bonds, cash or property. Some funds, like managed funds or with-profit funds, have a bit of everything, while others can be invested in only one type of asset.

Funds mainly invested in cash or bonds are lower risk and are less likely to fluctuate in the short term, but also less likely to show significant growth in the long term.

Funds mainly invested in equities are higher risk and are more likely to fluctuate in the short term, but also more likely to show significant growth in the long term.

How do market conditions affect my policy’s value?

All fund types are affected by market conditions, and the wider economy, in some way. If market conditions are good, funds are more likely to grow, and if they’re bad, funds are more likely to go down.

Of all the asset types, equities are most directly linked to market conditions and are more likely to show an instant response to a market upturn or downturn.

How do charges affect my policy’s value?

 We deduct a charge for managing your policy, called an Annual Management Charge. If you’re invested in unit-linked funds, you’ll also have charges deducted at a fund level, and the amount of charge varies from fund to fund.

For example, externally managed funds are likely to have higher charges because they employ fund managers to make investment decisions on a daily basis.

You should also consider that each fund has to grow by more than the amount it charges for you to get any return on your investment. So, if a fund charges 1% each year, it will need to grow by more than 1%, otherwise the charge will start eating into your money.

What can I do about it?

If you’re invested in a unit-linked fund you can see whether it makes sense to switch into another fund. You can switch funds any time you like. You just have to let us know which fund or funds you want to switch into, and we’ll do the rest for you.

Unfortunately you’re not able to switch funds if you’re wholly invested in a with-profit fund.

What should I consider if I’m interested in switching funds?

Follow these steps to see if switching funds might be a good idea for you:

1. Use our risk profile tool to answer some questions and assess your appetite to risk.
2. Go to our fund centre to match your risk appetite to suitable funds – use the filters or keywords to narrow your search. Remember that lower risk funds are less likely to fluctuate in the short term, but also less likely to show significant growth in the long term, while higher risk funds are more likely to fluctuate in the short term, but also more likely to show significant growth in the long term.
3. Use our fund comparison tool to compare funds side-by-side.

What if I’m not sure?

Before making any decision, you should get independent professional advice from a Financial Adviser. An adviser can make a personal recommendation based on your individual circumstances and the options available to you. If you don’t have an adviser, visit MoneyHelper for further information. You may have to pay for any advice you receive.