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Your Mutual

Putting our members at the heart of everything we do

How we manage your money

When you choose to invest with us your money is placed in a tax-efficient fund that will not attract income tax or capital gains tax throughout your investment term. Any money you withdraw from your investment will also be tax-free

Investing with Shepherds Friendly

Your money is invested on your behalf by our fund manager in an investment fund that is made up of a broad variety of assets that includes stocks and shares, unit trusts, bonds, property and cash. This is known as our With-Profits Fund.

Our products that invest in the With-Profits Fund are:

Our With-Profits Fund

The With-Profits Fund is a single fund that is invested across a broad range of assets with the aim of increasing the value of your investment through the payment of annual bonuses. It usually invests primarily in stocks and shares with the aim of achieving higher growth over the medium to long-term.

The value of the annual bonus will depend on the performance of the fund throughout the period your money has been invested for. Because investment values can fluctuate year by year, we look to ensure that these fluctuations are evened out wherever possible by applying a process known as ‘smoothing’.

The benefits of smoothing

We apply smoothing to your investment to try to minimise the effects of stock market fluctuations and to try to ensure that we can pay you an annual bonus. In doing this the annual bonus may not always directly reflect the fund’s performance within that year. For example, when investment conditions are good, we may decide to hold onto some of the profit achieved in that period in order to compensate for any period when conditions are less favourable. This may mean that in poor investment conditions we are still able to pay a bonus from the reserves we have acquired.

If we hold back some of the profit in favourable investment conditions, and conditions remain good for the rest of the term of your investment, then we may also apply a final bonus when your savings plan matures that reflects this.

Unlike some more volatile stocks and shares investments, the value of your savings plan will not fluctuate daily and we will never take away a bonus once it has been paid to you.

Risks associated with the With-Profits Fund

As the Fund usually invests primarily in stocks and shares there are inevitably risks associated with it. Unlike a cash-based account which will usually give you a set and guaranteed rate of interest on your savings, when investment conditions are poor we may not a pay a bonus into your investment.

Because of this you should view any investment where performance is based on stock market conditions as medium to long-term, and this includes our plans.

Bonuses from the With-Profits Fund

The returns achieved by our With-Profits Fund are used to pay a yearly bonus into your investment, whenever possible. You will be notified of your bonus in your annual Bonus Statement, the value of which will depend on the performance of our With-Profits Fund.

Once a bonus has been added to your investment we will never take it away, and every following year the performance of the fund will determine the value of your bonus.

You may also get a final bonus when your investment period ends depending on the performance of the fund throughout your investment term.

More information

For a more detailed insight into how we manage your money, please see the following documents. You can download and keep these for your future reference.

Principles and Practices of Financial Management (PPFM)
Board Report to Policy Holders
Investment Update