With-profits Investment information

Main with-profits fund investment information

Report overview

Before we get started...

Market and Economic Review

This review is based on information and commentary provided by Columbia Threadneedle Investments.

Global equities rose at a double-digit pace in 2021, even as volatility increased towards the end of the year. After a weak start in January, shares notched seven straight monthly gains, driven by robust corporate profits, ultra-loose monetary policy, the rollout of Covid vaccines and optimism about further US fiscal stimulus. From September onwards however, performance was more mixed as central banks in developed markets looked to address rising inflation concerns. Volatility spiked in November amid concerns about a rapid rise in Covid cases driven by the new Omicron variant. Nonetheless, equities ended the year strongly, posting a gain in December and trading near record highs. Commodities (natural resources and agricultural products) also ended the year strongly, lifted by pandemic-related supply bottlenecks and the positive demand implications of economic reopening. Core government bond markets posted negative returns as accelerating inflation fostered anticipation of higher interest rates. Corporate debt held up better; the positive earnings backdrop and a low default rate helping.

The pandemic continued to dominate investor sentiment over the period. Developed markets countries rolled out vaccines in the first few months of the year with relative smoothness, helping to promote a revival in economic activity, which bolstered equities. Less positively, initial progress was slow in many emerging markets, but some Asian countries made good headway later in the year. But there was some relief as initial evidence suggested that Omicron, while highly contagious, was relatively mild in effect and caused fewer hospitalisations and deaths.

A shift in the outlook for monetary policy was a prominent theme of the year as inflation readings in numerous countries indicated that prices were rising swiftly. During the initial months, the key developed markets central banks argued that higher prices would likely prove to be temporary and maintained their ultra-loose policies, continuing monetary stimulus and holding their key interest rates near or below zero. The picture began to change around mid-year as inflation continued to accelerate, rising well above official targets in the US, the UK and the Eurozone. As the year came to a close, core developed market central banks made a dramatic shift toward tightening policy: just days apart in mid-December, the Federal Reserve in the US projected as many as three rate hikes before the end of 2023, while the UK’s Bank of England raised rates for the first time since 2018 and the European Central Bank laid out plans to end their pandemic stimulus programme.

Main with-profits fund performance review

The MSCI All Country World Index, a measure of global equities, returned 20.1% in Sterling terms. The level of investments in the US and Europe benefitted the fund where stocks were lifted by stimulus-related optimism and strong corporate profits. In Europe, stock selection further accelerated performance. UK equities performed strongly but below the global average. The other dominant theme of the year was slowing economic growth in China exacerbated by high borrowing in the Chinese property sector and regulatory clampdowns in pursuit of ‘common prosperity’. Throughout the year we maintained a reduced investment in China which offset some but not all the poor performance in Emerging Markets and Asia. Previously a weak asset class, property performance improved significantly over 2021 – particularly in the second half of the year as inflationary concerns benefitted our portfolios. Dynamic Real Return performance, though positive was somewhat subdued and below expectations.

In core government bond markets, yields rose (meaning prices fell) owing to rising inflation and anticipation that key central banks would rein in their stimulus measures. Our allocation in government bonds – especially Gilts – has been below that of the funds’ benchmark; this decision has helped to cushion the underperformance.

Corporate bonds proved more resilient, helped by generally robust earnings and a low default rate. Over the year we favoured High Yield bonds which delivered a positive return over Investment Grade bonds which were slightly negative.

Standardised Performance for the main with-profits fund

These figures show the investment return (before tax and charges) on the with-profits fund each calendar year for the last five years

Year Investment return 
Year to 31 December 2017 7.9% 
Year to 31 December 2018 -4.2% 
Year to 31 December 2019 14.3%
Year to 31 December 2020 8.2% 
Year to 31 December 2021 7.0%

Year Investment return 
Year to 31 December 2017 7.9% 
Year to 31 December 2018 -4.2% 
Year to 31 December 2019 14.3%
Year to 31 December 2020 8.2% 
Year to 31 December 2021 7.0%

Responsible Investing

Over the year, we improved our Environmental, Social and Governance (ESG) metrics to assess the fund against the benchmarked indices. The fund typically outperformed the benchmark with lower carbon intensities and emissions whilst holding better ESG-rated assets.

2021 ESG Metrics Fund Benchmark 
Carbon Intensity 126 167
Carbon Emissions 70 117 
CTI ESG Ratings 2.31 2.40 

2021 ESG Metrics Fund Benchmark 
Carbon Intensity 126 167
Carbon Emissions 70 117 
CTI ESG Ratings 2.31 2.40 

Columbia Threadneedle Investments

  • Since 1 November 2011 the asset management of our funds has been undertaken on our behalf by Columbia Threadneedle Investments. Columbia Threadneedle is responsible for the day to day management of the assets within investment guidelines set by Liverpool Victoria Financial Services Limited.
  • Columbia Threadneedle is a leading international investment manager that manages £557bn of assets (as at 31 December 2021), investing on behalf of individuals, pension funds, insurers and corporations. Columbia Threadneedle is the global asset management group of Ameriprise Financial, a leading US-based financial services provider. Columbia Threadneedle’s website address is columbiathreadneedle.co.uk.