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Cash interest explained |
You will receive interest on balances in your platform cash account at the prevailing rate.
Embark Investment Services Limited acts as the custodian for investments on the Willis Owen platform and is one of our strategic partners that provides our Willis Owen ISA, GIA, Junior ISA and SIPP.
Embark places cash with a number of banking partners for safekeeping and to provide the potential for you to earn interest on money in your platform cash account. By managing cash in this way, it aims to provide better protection and a higher overall level of interest than if all funds were placed with a single bank.
The rates of interest paid by banks will vary. Embark retains a portion of the interest earned to cover its costs in managing platform cash.
Current Interest Rate
The table below shows the current customer interest rate payable on cash balances along with the amount of interest retained by Embark. The customer interest rate shown is that after accounting for interest retained by Embark:
| Date From | Customer Interest Rate | Interest retained by Embark |
|---|---|---|
| 25th November 2024 | 2.3% | 1.75% - 2.00% |
Embark can change the rate of interest at any time and it reviews the position at least quarterly. Interest is calculated and accrued daily and is credited to your account on the first of each month. If you transfer out, accrued interest is applied at the point of transfer. We will inform you if and when the interest rate changes as soon as is practicable.
Interest retained
The table below shows the yearly equivalent rates of interest Embark expects to pay based on a range of possible yearly interest rates it may earn.
| Interest Embark expects to earn | Customer Interest Rate | Interest retained by Embark |
|---|---|---|
| 0-1% | 0 – 0.46% | 0 – 0.54% |
| 1-2% | 0.46% – 0.94% | 0.54% – 1.06% |
| 2-3% | 0.94% – 1.46% | 1.06% – 1.54% |
| 3-4% | 1.46% – 2.02% | 1.54% – 1.98% |
| 4-5% | 2.02% – 2.61% | 1.98% – 2.39% |
| 5%+ | 2.61%+ | 2.39%+ |
Historic Interest Rates
To see details of historic customer interest rates, along with the amount of interest retained by Embark, click here.
Equity Styles Explained |
Market capitalisation is an indication of the size of the companies being invested in. It is calculated by multiplying the number of shares issued by the company by the current share price. Market capitalisation is divided into ‘large’, ‘medium’ or ‘small’ according to the below:
Large – Companies that have a market capitalisation greater than $10 billion.
Medium – Companies that have a market capitalisation between $2 billion and $10 billion.
Small – Companies that have a market capitalisation below $2 billion.
Companies can be categorised as ‘value’, ‘blend’ or ‘growth’ as defined below:
Value – Companies that are considered to be trading at a share price below what their fundamentals would suggest.
Blend – Companies that do not exhibit solely value or growth characteristics.
Growth – Typically well-established companies which are considered to have above average prospects for long-term growth.
Equity Regions Explained |
Equity region indicates in which countries the underlying shares within your portfolio are listed.
USA – Companies listed on a stock market in the USA.Canada – Companies listed on a stock market in Canada.
Latin America – Companies listed on stock markets in the Caribbean, Central America and South America, such as Mexico, Brazil and Argentina.
United Kingdom – Companies listed on a stock market in the United Kingdom, Guernsey, Isle of Man and Jersey.
Eurozone – Companies listed on stock markets in countries which have the Euro as their official currency, such as France, Germany and Spain.
Europe ex Eurozone – Companies listed on stock markets in western European countries which do not have the Euro as their official currency, such as Denmark, Sweden and Switzerland.
Europe Emerging – Companies listed on stock markets in European emerging markets, such as Poland, Russia and Turkey.
Africa – Companies listed on stock markets in African countries, such as Egypt, Nigeria and South Africa.
Middle East – Companies listed on stock markets in Middle Eastern countries, such as Israel, Qatar and Saudi Arabia.
Japan – Companies listed on a stock market in Japan.
Australasia – Companies listed on stock markets in Australia and New Zealand.
Asia Developed – Companies listed on stock markets in developed Asian countries, such as Hong Kong, Singapore and Taiwan.
Asia Emerging – Companies listed on stock markets in emerging Asian countries, such as China, India and Thailand.
Equity Sectors Explained |
Cyclical – Companies which operate in industries that are considered to be significantly affected by economic shifts. When the economy is prosperous, these industries tend to expand and when the economy is in a downturn they tend to shrink.
Basic Materials - Companies that manufacture chemicals, building materials and paper products. This sector also includes companies engaged in commodities exploration and processing.
Consumer Cyclical - This sector includes retail stores, auto and auto-parts manufacturers, restaurants, lodging facilities, specialty retail and travel companies.
Financial Services - Companies that provide financial services include banks, savings and loans, asset management companies, credit services, investment brokerage firms and insurance companies.
Real Estate - This sector includes companies that develop, acquire, manage and operate real estate properties.
Sensitive – Companies that operate in industries that ebb and flow with the overall economy, but not severely. Sensitive industries fall between defensive and cyclical, as they are not immune to a poor economy, but they also may not be as severely affected as cyclicals.
Communication Services - Companies that provide communication services using fixed-line networks or those that provide wireless access and services. Also includes companies that provide advertising & marketing services, entertainment content and services, as well as interactive media and content provider over internet or through software.
Energy - Companies that produce or refine oil and gas, oilfield-services and equipment companies and pipeline operators. This sector also includes companies that mine thermal coal and Uranium.
Industrials - Companies that manufacture machinery, hand-held tools and industrial products. This sector also includes aerospace and defence firms as well as companies engaged in transportation services.
Technology - Companies engaged in the design, development and support of computer operating systems and applications. This sector also includes companies that make computer equipment, data storage products, networking products, semiconductors and components.
Defensive – Companies which operate in industries that are relatively immune from economic shifts. These industries provide services that consumers require in both good and bad times.
Consumer Defensive – Companies that manufacture food, beverages, household and personal products, packaging, or tobacco. Also includes companies that provide services such as education and training services.
Healthcare – This sector includes biotechnology, pharmaceuticals, research services, home healthcare, hospitals, long-term-care facilities and medical equipment and supplies. Also includes pharmaceutical retailers and companies which provide health information services.
Utilities - Electric, gas and water utilities.
Product Involvement Explained |
Product Involvement metrics measure the percentage of a portfolio's assets exposed to a range of business areas and activities. For example, if a fund's involvement in Animal Testing is 20%, that means 20% of the fund's assets are invested in companies involved in Animal Testing.
Exposure percentages are calculated by summing the weights of a portfolio’s holdings in the companies involved in each area. In most cases a company is considered ‘involved’ in a certain area if it's revenue from that area exceeds a certain minimum threshold. In other areas, for example animal testing, abortion, contraceptives and human embryonic stem cell research, there is no revenue threshold such that if the company has any involvement at all in these areas, it will be considered involved. If a company is considered involved in an area, the entire weight of that company in a portfolio is counted when determining the overall percentages shown.
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ESG Pillars Explained |
Morningstar's ESG Pillar Scores help investors understand how a fund is performing in three key areas: Environmental (E), Social (S), and Governance (G). These scores break down the overall sustainability risk of a portfolio into these specific categories.
Each score reflects how much environmental, social, and governance factors contribute to the overall risk of companies in the fund. The scores are averaged based on the size of each company in the portfolio. Lower scores mean lower risk.
To receive these scores, at least 67% of the fund’s assets must be rated for their ESG risk. This provides investors with a clearer view of a fund’s exposure to sustainability risks in different areas.
Asset Allocation Explained |
Equity – Often referred to as shares. Shares are units of ownership in a company which entitle the holder to certain rights for example to exercise voting rights or to participate in the company’s profits.
Fixed Income – Often referred to as fixed interest or bonds. When you invest in bonds, you are typically lending money to a company or a government in return for a defined series of interest payments and the promise that a defined value (called the ‘face’ or ‘par’ value) will be returned at a certain point in time
Property – Investments in property include residential, offices, warehouses and shopping centres.
Cash – Money held in cash or cash-like instruments, often to ensure there are sufficient liquid assets within a portfolio.
Other – Contains other investments such as commodities, preferred stock and derivatives.
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Before we cover equalisation, here is a quick refresher on what is meant by a fund "going ex-dividend".
This term refers to the period between the ex-dividend (XD) date and the payment of the dividend. If you sell the fund on the XD date or during the XD period, i.e. when the fund has gone ex-dividend, you will still be entitled to the dividend payment. If however, you sell a fund before the XD date, the dividend will be paid to the new owner of the fund.
Many funds receive dividends from the companies in which they invest. These payments are added to the fund’s cash reserves and held there until they are paid out as dividends to the fund’s unitholders. As the reserves grow, so too does the fund’s net asset value causing the offer price for the fund’s units to increase in-line (ignoring market fluctuations).
When the fund’s next dividend payment to its unitholders becomes due on the XD date, a sum is set aside and is no longer part of the fund’s cash reserve. Consequently the unit price usually falls.
With equalisation, investors are split into two groups:
All unitholders, both Groups 1 and 2, receive the same dividend per unit. The difference is that the payment for Group 1 is entirely comprised of income whereas the payment for Group 2 unitholders is split into two components. As Group 2 unitholders have purchased units between the dividend dates, part of the payment is the income which has accumulated from the date of purchase. The other is a partial return of the amount paid as they bought units at a higher price. This latter part is known as a capital repayment or an equalisation payment.
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A |
This is the XD date for our example fund. Group 1 unitholders (those who purchased before this date and still hold their funds) will receive the full dividend payment as income. Any investors who purchase units on this date will be Group 2 unitholders and will have to wait until the next distribution date before they receive a dividend payment. This payment will be income only; there will not be an equalisation part as they have invested at the start of the period. |
|
B |
Assuming there is no market movement, an investor purchasing units between the ex-dividend dates will pay a higher price due to the dividends accumulated from the fund’s underlying investments. These investors will be classified as Group 2 unitholders and they will receive the next dividend payment. As they have purchased units exactly at the midpoint between the two ex-dividend dates in this example, their dividend payment will be split 50:50 between income and capital. |
|
C |
Purchasers of units on this date will be Group 2 unitholders and entitled to the next dividend payment. This will mainly be a capital repayment. |
|
D |
This is the next XD date for the fund. The price drops to reflect that the dividend sum has now been set aside ready to be paid out and is no longer part of the fund’s cash reserves. On the XD day, those unitholders who were previously Group 2 now become Group 1 unitholders and, as such, receive the full dividend payment as income. |
There are no tax implications for investors who receive equalisation payments if they hold their funds within tax wrappers such as ISAs.
Unitholders whose funds are held outside of one of these tax wrappers, however, need to be aware of the tax treatment of the different elements of the dividend payment.
The income part is subject to income tax in the usual way.
The equalisation (or capital repayment) part needs to be considered when calculating any future gains as it has to be deducted from the purchase price of the holding.
| Action | Treatment |
|---|---|
| Purchase cost of holding | £5,000 of units purchased |
| First dividend received after 2 months | £150 (£100 is equalisation payment and £50 income) |
| Sale proceeds after 3 years | £8,000 of units sold |
| Equalisation payment deducted from purchase cost of holding | £5,000 - £100 = £4,900 |
| Capital gain calculation | £8,000 - £4,900 = 3,100 |
