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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 March 2024 | 2.46% | 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.
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Historically, the nature of a unit trust was to expand and contract in-line with the performance of its portfolio and the popularity of its sector. A fund manager’s portfolio would increase as new money flowed into their funds and they would have a large amount of spare cash to invest. Conversely, when their funds fell out of favour, they would sell assets in order to meet the redemptions.
Times have changed and we have seen an increased use of closing a fund, in one way or another, to assist in its management.
Fund managers may choose to ‘soft’ or ‘hard’ close a fund. With a soft close, technically, it is still possible to invest, but it is usually made unattractive to do so. Generally, a fund provider will levy charges on a fund in order to deter investors. These charges can include the removal of any discounts the manager may offer to intermediaries. Regular savers are usually unaffected by a soft closure and can normally continue to contribute into the affected fund.
With a hard close, the fund provider will simply not accept any new money into a fund.
One school of thought suggests that when a fund gets to a certain size, the market can see what the fund manager is doing. So a manager cannot nip in and out of the market undetected.
Most of the time, soft or hard closing a fund is not necessary, however, in some specialist areas there might be a good case to close. The UK Smaller Companies sector is a good example of this. A fund manager may not have difficulty finding many companies to invest in when the fund size is at £500 million but may do if the size reaches £1-2 billion. In this situation, the fund manager may decide to soft close the fund until it reaches a manageable size.
No, there is no cause for concern. Your interests will continue to be looked after by the fund manager. However, as with all your investment, it is wise to keep a keen eye on it to ensure it continues to meet your needs.
