It’s an impossible task to try to predict fund performance or event which asset class will perform best over the medium to long term. Many clients will look for stable growth and investment market volatility will always cause nervousness amongst investors.
Caught between market volatility and low interest rates – clients are between a rock and a hard place – is there a middle ground?
An impartial review
Synaptic Software have reviewed and profiled the Prudential funds and products below within the risk profiles used on their Synaptic Fusion.
- Onshore bond – Prudential Investment Plan
- Pension – Flexible Retirement Plan
- PruFunds – including the Risk Managed PruFunds
- Total Return Funds – Managed Defensive and Managed Cautious
- Dynamic Portfolios
Aim to reduce extreme volatility with investment choices
Prudential’s Funds aim to reduce extreme volatility with investment choices and solutions to provide greater clarity and simplification on fund selection. Advisers have access to our multi-asset funds such as;
- PruFund and PruFund protected Fund range
- Four Risk Managed PruFunds
- Two Total Return Funds
- Five risk managed Dynamic Portfolios
For more information on how the Synaptic Risk Framework has rated Prudential Products and Funds, please read this Fund Mapping Guide > Fund Mapping Sales Aid.
Building on our strengths and stability
Prudential has built its investment strength on their ability to manage multi asset funds, proven by the management of its With-Profits Fund.
Using the traditions and strengths of their With-Profits Fund, we developed a range of multi-asset funds. Some of these funds are called the PruFund Range of Funds which aim to suit different attitudes to risk and by limiting their levels of equity exposure. PruFunds are managed by the Portfolio Management Group (PMG) who are in-house investment strategists and “manager of managers” for the Prudential Group in the UK. PMG are a team of over 25, which includes economists, mathematicians and analysts who are specialists in different areas of the investment world. PMG control over £144 billion (30th June 2013) of Prudential's investments.
For over 15 years PMG have successfully managed the asset mix of a range of Prudential’s multi-asset managed funds.
PruFund funds are designed to deliver smoothed returns using Expected Growth Rates (EGRs). The EGR is the long term outlook on how the assets within the funds will grow and is published quarterly in advance. As the EGR reflects longer term investment expectations, we do not anticipate changing the rate very often. Any changes to the EGR will only take place at quarter end dates.
As well as EGRs, we use unit price adjustments to keep the smoothed price of units in line with the underlying value of the assets in the fund. These adjustments can be down or up, depending on whether its above or below the unsmoothed price. There may also be occasions where we have to suspend the smoothing process for one or more PruFund funds to protect the clients invested in it. The longest standing PruFund fund for Pensions, The PruFund Growth Pension Fund, has had only one downward unit price adjustment since launch on 25th November 2008 – and since 25th February 2009 the fund has always been growing.
EGRs could help make planning and client review meetings easier as PruFunds should perform in line with client expectations. It also gives you some predictability of future income levels from any Ongoing Adviser Charges which you may take from the fund.
Which clients could benefit from PruFund?
- The PruFund Range of Funds aim to help you match the results of client risk assessments to funds that offer a range of potential returns and levels of risk.
- Clients approaching retirement or in retirement – as they may have a lower capacity for loss, they may be looking for the potential of smoothed growth.
- Clients requiring income who are looking to protect fund values from erosion due to market volatility.
In a perfect world, investment funds would deliver enough return to generate a desired income level for clients while maintaining the original capital value. No one single asset class is likely to deliver these requirements while adhering to the clients attitude to risk and capacity for loss. Therefore a blend of assets in a portfolio may provide a better solution by reducing risk by diversification and potential capital growth. Prudential’s range of multi-asset solutions, including the Dynamic Portfolios and PruFunds, are available across all our core investment and pension wrappers.
For more information on our multi-asset solutions and to find out more about how Dynamic Portfolios, the Total Return Funds and our PruFund range of funds can help deliver growth for your clients in the face of investment volatility please speak to your usual Prudential contact, or visit pruadviser. Further information can also be found in the Fund Mapping Guide which highlights the Synaptic Risk Profiling funds > Fund Mapping Sales Aid.