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’

We divide your investment into units of equal monetary value. The number of units you buy with your investment depends on the unit price of the fund on the date you invest. We add the regular bonus, if applicable, to your investment by increasing the price of the units you have. The number of units stays the same unless any additional investment is made.


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

Regular bonuses are designed to be sustainable and provide steady growth over time in the value of your investment. We review regular bonuses at least twice a year. In determining regular bonuses we take into account any returns or losses from earlier years together with an estimate of the future investment return we expect to earn over the long term on the assets.

A final bonus

Final bonus aims to pay any balance between the regular bonuses we have already added and the performance of the fund over the whole period of your investment. You may receive a final bonus when you take your benefits. This makes sure that you get a fair share of the return your investment has earned.


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.

Market Value Reduction (MVR)

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, there 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 risk assets include shares (equities) and property; medium and lower risk investments include fixed interest (gilts and other bonds), alternative investments and cash/money market.

You can find out what the current asset mix is by referring to our With-Profits Summary brochure 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.

The types of asset we invest in

We use our investment expertise to decide the best selection of assets in which to invest. They include:

Shares (equities)


Alternative investments

Fixed interest – gilts

Fixed interest – other bonds

Cash/money market

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.