Fund managers are adamant that mutual funds are better suited to most investors, arguing they can deliver tailored asset allocations which with-profits cannot.
They say mutual funds are stealing massive market share from with-profits products and will continue to do so.
Investec joint managing director Andy Sowerby argued at the Money Marketing round table debate on with-profits that most with-profits products have been disingenuously marketed as a homogeneous asset class and that falling sales are the price paid for this opaqueness.
Credit Suisse Asset Management head of research Toby Hogbin accepted with-profits have served consumer need but said he believes products and services such as managed funds, multi-manager and wraps will increasingly take over. He said: “There are some managed funds that offer a similar service to with-profits funds but with the benefit of clarity on the under-lying asset allocation, charges applied and the performance of the fund in any period. Specialised funds provide IFAs with the opportunity to deliver asset allocation that is bespoke to that particular investor.”
Sowerby said: “With-profits is not a homogeneous asset class but, looking back, it was marketed as a homogeneous asset class. It has suffered from its opaqueness.”