With-profits funds outperformed in 2025, beating high street fixed savings rates, a new report from Howden has found.
According to Howden’s ‘UK With-Profits funds’ report, all with-profits funds generated a positive total asset return in 2025 at a median rate of 9.6%. This exceeded high street savings rates for the year and maintains with-profits outperformance of savings rates over 10 years.
Howden’s analysis covers £171 billion of assets across 93 funds from 19 insurers and is designed to help UK life insurers determine whether their with-profits asset allocation remains appropriate for them.
Its 2025 analysis found that all 93 of those funds generated positive investment returns across a 12-month period, with larger funds generally outperforming smaller funds. The spread in returns over the year was 17.3%, with the highest return being 18.9% and the lowest 2.8%.
Howden said the sector benefited from a high level of exposure to UK equities, which were the strongest performing asset class generating a median return of 21.8%. Global equities also performed well throughout 2025, driven by optimism around AI.
On average, with-profits funds outperformed Howden’s benchmarks for government bonds, overseas equities and cash asset classes.
Amit Lad, principal at Howden Insurance Actuarial & Longevity, said: “With all 93 funds delivering positive returns, 2025 was a strong year for with-profits. Beating high street fixed savings rates has become a familiar result, and reflects both favourable markets and the expertise of investment managers.”
Lad said while a bias towards UK equities paid off last year, the gradual increase in global equity exposure remains important for longer-term performance. “As reporting and governance demands continue to grow, improvements in the quality of investment data have been welcome. However, strong returns should never discourage scrutiny of costs. With manager fees varying considerably, regular conversations about performance and value for money remain essential,” added Lad.
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