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This month metfriendly’s Chief Executive, Stuart Bell looks back on 2010 investment performance and reports on record lump sum investments.
Stuart Bell, Chief Executive - metfriendly
At this time of year, we prepare our Report and Accounts, taking stock of what happened in 2010 - and planning for the year ahead. Last year was good for metfriendly in many ways - a good investment return, a record level of lump sums invested with us, and increasing numbers joining the society.
Our members must have a connection with the police service in the UK. They
save and invest with us in our with-profit fund, and rely on us to make the most of
their money - but without taking needless risks. In the jargon of the regulator, our
Board sets a low risk appetite - and that applies particularly to our investment policy.
All firms suffered when the credit crunch hit in 2008, and most have bounced
back since. But our prudent approach enabled us to avoid panic sales. The withprofit investment return was 11% in 2009 and 9% in 2010. Our members invested record lump sums with us in 2010 - £5.5 million - more than double any previous year. We are preparing for another busy period this March and April as we enter a new tax year. This year’s ISA allowance expires 5 April. But our members often make the most of their allowance by investing early in the new tax year.
Our ISA is an Investment ISA, and does not prevent you taking out a Cash ISA as
well. The ISA limit in 2010-11 is £10,680 in total, of which no more than £5,340 can go into a Cash ISA. Although our ISA is designed to be for the medium-to-long term, members are not locked in - and can cash in for a fair value at any time. Many Cash ISAs now lock you in to a fixed term in order to offer a decent interest rate.
Good results for us mean good results for our members. An ISA cashed in on 1
March this year after 5 years will have grown by 32%, and after 10 years by 83%.
This growth comes from annual and final bonuses being added to the initial investment.
The annual bonus rate is currently 2.4%. Final bonus rates fluctuate to reflect the ups and downs of the investment market, but the return on a with-profit fund aims to be both smoother and safer than direct investment in shares. Nonetheless, final bonuses can be negative - but there is a guarantee this will not happen after 10 years.
We send all our members a newsletter in early March, explaining their bonuses and
giving more detail of how we have done. We will send a copy to non-members on
request. We then publish our Report and Accounts in early April and these will be
on our website. We send a printed copy to anyone on request.
• For further information visit
mpfs.org.uk or give them a call on 01689 891454
