Healthy Investment, the mutually owned provider of savings and investments, has reported strong performance in the year ending 31 December 2019. According to its newly published annual report and accounts, last year saw the friendly society increase the assets it manages on behalf of members by almost 16 per cent, to £176.2 million.
Members invested a further £12 million in the Bury, Greater Manchester-based society’s savings and investment products during the year. These products include ISAs, Investment Bonds, Junior ISAs, Child Trust Funds and savings plans.
The value of Healthy Investment’s largest investment fund, its Ethical With-Profits Fund, grew by 13.2 per cent during 2019 as a result of strong investment performance. The fund achieved this while also being managed with a cautious attitude to risk.
Unlike mainstream “unit-linked” investments, the with-profits model under which most of Healthy Investment’s products operate does not pass all investment returns, or losses, on to members in real time. Instead, it “smooths” the investment experience of its with-profits members by holding back a proportion of positive returns in years of strong performance to help mitigate the falls in value that would otherwise be experienced in years of weaker markets.
Returns are paid to members in the form of “bonuses” that are added to the value of their investments on an annual basis. Because of the market uncertainty resulting from the coronavirus pandemic Healthy Investment has taken the decision to defer declaration of the annual, or “reversionary”, bonus payable to investors in its Ethical With-Profits Fund until later in the year.
Peter Green, chief executive of Healthy Investment, explained, “Rather than declaring a bonus now, after much deliberation we have decided to defer the decision on this year’s reversionary bonus until stability returns to the markets and we have a clearer picture of the economic outlook.
“We hope then to announce a bonus that enables members to benefit from the society’s strong performance last year while also protecting the long-term security of their investments during the uncertain times ahead.
“The decision to defer declaring bonuses for 2019 was not taken lightly but is in the best interests of members and aligned with the regulatory expectations of the Prudential Regulation Authority around the distribution of profits. Retaining a strong financial position will enable us to deliver the best overall outcome for members.”
Healthy Investment will, in the meantime, continue to pay an “interim” bonus to members who withdraw money from their investments during the year. Even with the market turmoil experienced in 2020, the society has not needed to reduce the value of the funds of any members wishing to withdraw money invested before the end of 2019.
Healthy Investment’s Ethical With-Profits Fund has a diversified portfolio of assets, much of which is now held in government securities and fixed interest corporate bonds. These asset classes have seen little capital reduction since the beginning of the year.
The society also continued to build on its already substantial financial strength during 2019. As at 31 December 2019 Healthy Investment had a solvency capital adequacy ratio of 306 per cent of its liabilities, compared to 224 per cent at 31 December 2018.
Steven Spilsbury, chairman of Healthy Investment, said, “Despite unprecedented times the society remains well placed to deliver on our long-term business plan. We remain well positioned in our chosen marketplace to continue to deliver growth and maintain strong service levels to our members, and we will make every effort to see that our members are rewarded.”
