THE terrible events of September 11 of course shocked everyone, created uncertainty in financial markets and caused a surge in the price of "crisis" government bonds.

The man in the street, however, very often doesn't have traditional bolt-holes and therefore has to look for alternatives. With all the current uncertainty the potential volatility of direct equity investment is as unappealing as the low returns on offer from deposits.

On the subject of interest rates, I would expect the pressure on interest rates, over the short to medium term, to be downwards, as governments around the world attempt to keep economies moving. This is bound to be bad news for savers.

With Profits bonds offer a viable "middle ground" with their underlying mix of equities, fixed-interests and cash allowing investors to spread their risk within a single investment and benefit from the smoothing effect of this investment concept.

With-profits have delivered excellent returns over the longer term.

Returns over the five years to August 1, 2001, have seen the average bond return in excess of nine per cent net of all charges and basic rate tax, while the better funds have averaged in excess of ten per cent per annum.

Considering that with-profits is generally considered a half-way house between deposits and equities, it is amazing that five-year returns are more akin to those of equity funds that the relatively poor return of deposits.

It would however, be remiss not to acknowledge recent criticism levied at with-profits.

However, much of this criticism seems to imply that alternative, perfect, investment has pros and cons. With-profits may not be perfect, but, as a concept, it has stood the test of time and allowed many cautious investors to sleep easy at night.

For cautious investors looking for a better return than deposits but wary of direct equity investment, maybe there really aren't actually any alternatives to the concept of with-profits.

John Dresser is a director of Hennessey & Partners, Darlington