How do with-profits funds differ from unit-linked funds in terms of risk and potential returns?

How do with-profits funds differ from unit-linked funds in terms of risk and potential returns?

• A. With-profits have no guarantees; unit-linked have smoothing guarantees.
• B. Unit-linked funds guarantee market returns; with-profits reflect direct market exposure.
• C. With-profits typically include smoothing and guarantees through the insurer; unit-linked funds reflect the underlying investments with direct market exposure.
• D. Both fund types are identical in risk and return.

Answer: (C)