Hi What is the difference between shadow fund and retrospective accumulation using product charges? As I understand, both use actual investment return and deduct product charges. Can someone explain the difference please? Thanks
These two methods are conceptually the same. The difference lies in the practical application of the two versions. With the shadow fund approach, the asset share is updated behind the scenes on a daily basis, so it’s always available to look at, for any particular policy. The alternative would be just to perform this retrospective calculation as and when an asset share figure is needed. This calculation could be more approximate than the shadow fund approach; for example daily investment returns are less likely to be used. Best wishes Mark
