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How with-profits funds are invested

Bonuses, returns and smoothing explained

How it all works

With-profits is a type of investment where the returns earned by the fund are shared out through a system of bonuses using a process called ‘smoothing’


If you put some money in our With-Profit Fund, your investment will grow when bonuses are added to it.

The amount of bonus – and which one(s) you receive – depends on how well the With-Profit Fund has performed and which product you’ve invested through. Bonuses aren’t guaranteed and the amount (or rate) of any bonus can go down as well as up.

However, once bonuses have been added to your policy, they can’t be taken away.

They can include:

  • A regular bonus (or regular interest for the Secure Growth Fund), which is announced at least once a year, no matter which type of product you’ve invested in
  • A final bonus, which may be paid when you make a claim, withdrawal or switch to another fund. If you invest through a pension plan, it might also be paid when you take your pension benefits
  • An additional bonus, which may be paid on top of your regular bonus if the fund performs particularly well (only if you’ve invested in with-profits through the With Profits Pension Annuity or invested in the With-Profit Income Fund)


With-profits investments are designed to grow steadily in value from year to year, rather than being subject to the significant ups and downs of the stock market. That’s because we use a process called ‘smoothing’.

We ‘smooth’ fluctuations in the value of your investment by holding back some of the returns the With-Profit Fund earns in good investment years and use them to help pay bonuses in poor investment years. Losses made in poor investment years may also reduce returns in good investment years.

Things you need to remember

Because your money is invested in a mix of assets,  such as shares (equities), property, corporate bonds and gilts, we can't guarantee that your investment will grow.

There may be times when  market conditions mean that investment returns are lower than expected and smoothing can’t fully protect your investment. Then we might need  to apply what's known as a market value reduction (often shortened to MVR). 

If you make a withdrawal or switch to another fund whilst an MVR is in force, the value of your investment will be reduced. This is to protect people remaining invested in the fund and to make sure everyone gets a fair share of the actual investment returns earned. An MVR will not apply on a death claim.

How your money is invested

As a with-profits investor, your money is pooled with others’ and invested in a range of different assets (known as an asset mix), which make up our With-Profit Fund. By investing in a range of different assets rather than just one, we aim to achieve a more balanced return. However, this is no guarantee that the value of your investment won’t go down and you may get back less than you originally invested.

The fund will always hold a mixture of higher and lower risk assets to help achieve its objectives. Higher risks assets include equities and property; medium and lower risk investments include gilts, corporate bonds, cash and cash alternatives.

The type of asset we invest in

You can find out what the current asset mix is by referring to our Supplementary Fund Information document applicable to your policy. We use our investment expertise to decide the best selection of assets (or asset mix) in which to invest. Not all products will have the same asset mix.

Looking to invest?

Learn more about which products offer with-profits funds and how to start investing.

Product provided by: Aviva Life & Pensions UK Limited. Registered in England No. 3253947. Registered office: Aviva, Wellington Row, York, YO90 1WR. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Firm Reference Number: 185896.

Aviva UK Digital Limited introduces to Aviva Life & Pensions UK Limited for investments. Aviva UK Digital Limited is registered in England No. 09766150. Registered office: St Helen's, 1 Undershaft, London EC3P 3DQ. Authorised and regulated by the Financial Conduct Authority. Firm Reference Number: 728985.