Please read this information if you’re invested in the Deposit Fund.

The impact of low interest rates on your funds.
Due to the current environment of low interest rates, deposit funds are achieving very low returns. It’s possible therefore that any investment growth is not enough to cover the charges and your fund value could go down over time. Deposit funds should not be viewed as a long term investment as returns may not keep up with inflation.

The Bank of England Base rate is currently 0.5%. This has an impact on the interest that is paid on cash savings accounts and some investment funds.

Any funds classified as Money Market funds by the Association of British Insurers (ABI) are likely to be affected.   If your fund name contains the words; Money Market, Cash, Deposit, Money, Building Society, Income, Sterling Security or Secure Growth, it is probably a “money market” fund. The ABI sector of your fund can be checked at our fund centre.

When many of these funds were established the returns that could be achieved were much higher, but in the current environment of low interest rates they are now achieving very low returns. Any investment growth may therefore not be enough to cover the total charges and the value of your fund may go down over time, particularly when inflation is taken into account.

These funds are usually used for short term investments or to diversify an investment portfolio. As they do not experience the volatility of other asset classes, such as equities, they can still provide an important role in aiming to protect the capital value of investments.

What is a Money Market Fund?

The primary investment objective of this type of fund is to maintain capital and aim to provide a return in line with money market rates, before charges.

These funds invest in instruments such as:

  • Current account cash
  • Time deposits
  • Certificates of deposit
  • UK Treasury Bills
  • UK Short Gilts

What do I need to do?

You need to make sure that you understand the risks that each of your investments holds. Whilst Money Market/Deposit Funds are traditionally referred to as low or minimal risk, they do not offer the same opportunities for growth as other types of fund. Over the long term this means that investments in a Money Market/Deposit fund can suffer the effects of inflation and charges can also erode the value of the fund.

For example, with an investment return of 1% and charges of 0.65% per annum, a fund value of £1000 would grow to £1035 over ten years. Once inflation of 0.6% is taken into consideration this would have a value in today’s money of £974.

As long as you understand the effect that your fund choices may have on your investment and you’re comfortable with your choices you don’t need to do anything.

If you wish to switch funds you can do this easily by contacting us.

ReAssure cannot provide financial advice and cannot tell you what funds are right for you. If you need advice about which funds may be right for you, you should speak with your Financial Adviser (FA). If you don’t have an FA you can find one in your area at or by calling 0800 023 6868.