What is the difference between profits fund and balanced fund?

Inf0war

Read in Times article "With-profits 'better than cash'
With-profits policies have come in for criticism lately, but Beale Dobie, a traded endowment market maker, says that with-profits endowments offer a far better rate of return than cash on deposit. It points to a report in Money Management magazine which show the return on an average 25-year with-profits fund is £61,492 compared to £36,462 returned by a balanced fund. A savings account returns an average of £26,593. Beale Dobie says that investors can get a higher level of capital guarantee by investing in a traded endowment policy".

Looks like the profits fund is much more profitable than balanced fund. But does that implay that profits fund has much higher risk?

regards

dunstonh

With profits funds and balanced managed funds are generally in the same risk catagory. However, with profits funds can have some downside protection that is not present in a balanced managed fund.

Balanced managed funds tend to keep within a defined spread of investment areas. With Profits can alter the spread as they desire (or their solvency requires as many have had to do).

cheerfulcat

And of course there's a big difference between *traded* endowments and new ones...