Child Trust Funds are available at 3 different levels of risk, the
Abbey Child Trust Fund offers two different levels of risk.
An Abbey Child Trust Fund can either be a stakeholder plan or a non-stakeholder account.
Abbey Child Trust Fund Stakeholder Plan
These invest in a broad spread of stocks and shares and have a capped charging structure.
In addition to this, the fund is managed to reduce the level of investment risk, so that during the last five years of investment, the fund's exposure to shares is reduced and is gradually switched to cash deposits to help guard against short term falls in the stock market as your child approaches 18.
Abbey Child Trust Fund Non-stakeholder account
These are cash deposit based savings accounts with no exposure at all to stocks and shares.
A stakeholder plan is likely to offer the potential for greater investment returns over the long term, however, if stocks fall in value, then it is possible that the fund at maturity could be less than the contributions paid in.
This type of plan is more likely to appeal to those willing to take some investment risk.
Conversely, the cash deposit based account will benefit from the addition of regular interest and can never go down in value but is unlikely to offer the potential for the same level of investment returns achievable by investing in stocks and shares. This will be more suitable for those unwilling to expose the capital to any investment risk.