PruFunds aim to protect your clients from some of the short term ups and downs of direct stockmarket investments by using a tried and tested smoothing mechanism and globally diversified multi-asset portfolios.
PruFund's diverse asset allocation spreads risk across different asset classes and geographical locations and across public and private markets.
Please remember that the value of investments can go down as well as up, your client may not get back what they have paid in.
Choice
Discover PruFund
Learn how one of the UK’s largest smoothed funds is built to support advisers in delivering long‑term outcomes for clients.
Access
The PruFund range is accessible through a variety of packaged retirement and investment products on the M&G Wealth Platform and now on the Scottish Widows Platform. See individual funds for more details.
PruFund funds are invested in the Prudential With-Profits Fund, which is one of the largest and financially strongest with-profits funds in the UK. See the Principles and Practices of Financial Management (PPFM) that are applied in the management of our With-Profits funds.
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Popular support material
The PruFund client video provides an overview of the fund, its investment approach and the role it could play in helping investors meet their long-term financial goals.
Please use this link when sharing the video with your clients - https://prudential.videomarketingplatform.co/video/129143081/prufund-video
How does PruFund work?
Whether your client is approaching retirement or looking to produce an income, PruFunds aim to grow your client's money over the medium to long-term (at least 5-10 years) by utilising two of its main characteristics:
- Investment Philosophy
- How is PruFund invested?
- Smoothing
The Life Investment Office (LIO) are our investment experts. They are a team of over 80 people with specialist expertise in asset allocation, portfolio management and manager research. Their primary focus is asset allocation and their process has been in place for over 20 years.
LIO's Investment Manager Oversight team are responsible for selecting and monitoring the continued suitability of the underlying managers and assessing whether the mandates and funds are performing in line with expectations.
Their investment philosophy applies these core principles:
- Active portfolio management: Generating returns from a number of sources.
- Risk appetite: Ensuring each fund has an appropriate risk-return profile.
- Diversification: Across asset classes and geographies, evolving as markets and opportunities develop.
- Long-term investing: Taking a 5-10 year investment horizon and looking through short-term volatility. LIO are fundamentally buy-and-hold investors.
- ESG principles and beliefs: Integrated into investment decisions.
- Valuation: LIO take a forward-looking view to identify the assets they believe offer the best value.
Creating value over the long-term
LIO are fundamentally ‘buy and hold’ investors. New investments and asset classes will likely feature in portfolios for many years once added, albeit the amount of exposure may vary over time.
Discover how the LIO Long Term Investment Strategy team leverages resources available to them to create value over the long-term in this short video.
PruFunds are long-term investments (at least 5-10 years). The LIO's investment approach relies on assessing the long-term potential returns from a broad range of asset classes and seeks to deliver relatively stable returns across a range of market environments.
LIO build a view on expected cash returns, inflation and government bond returns for each region/country. They then add a ‘risk premium’ which is effectively an element of extra return investors can expect to receive to compensate them for taking on extra risk.
Asset allocation is a primary focus for LIO and the resource they apply to it is just one of the differentiators we believe sets them apart.
Asset class insights
Each individual PruFund invests in a spread of different types of asset classes across the globe. The five main asset classes are Equities, Property, Bonds (Corporate and Government), Alternatives and Cash. By spreading the investment across these asset classes, the volatility and risk associated with investing in a single asset can be reduced.
PruFund has access to a wide range of underlying investments, including some which individual investors may not be able to access directly. Take a closer look with your clients at some of the investments held in PruFund:
Other helpful resources
PruFund offers growth potential and a smoothed investment journey by using an established smoothing mechanism which can help to protect your clients from some of the impact of short-term market volatility.
To achieve smoothing PruFund uses Expected Growth Rates (EGRs) and where required, Unit Price Adjustments (UPAs). EGRs and UPAs are both part of the smoothing process.
The Expected Growth Rates (EGRs) are set quarterly, and reflect our view of how we think each individual PruFund will perform over the long-term (up to 15 years). Each PruFund has it's own EGR and your client's investment into a PruFund will normally grow daily in line with the relevant EGR.
Although we use a long-term view of performance to set the EGRs, we may have to take into account short-term performance when this is significantly different from our long-term expectations. If the short-term performance differs too much from our current EGR, the fund’s unit price is adjusted to amend the value of your fund up or down to ensure all fundholders receive fair value. We call these Unit Price Adjustments (UPA).
In highly unusual circumstances, we may need to reset the smoothed price of an individual PruFund or suspend smoothing to ensure all investors are treated fairly.
Other helpful resources
PruFund explained
The PruFund explained client video provides more information on how PruFund works, including smoothing.
Please use this link when sharing the video with your clients
Next Steps
