2025 PruFund Strategic Asset Allocation

An update from the M&GLife Investment Office (LIO) detailing the recent Strategic Asset Allocation (SAA) changes that have been implemented across the PruFund range of funds.

A forward-looking, evolving approach to strategic asset allocation:

We periodically review our strategic asset allocation against our long-term capital market assumptions, taking into account a range of possible future scenarios. We consider a range of qualitative scenarios and also benefit from our in-house, stochastic asset model, GeneSIS, to map out a broad range of future scenarios across capital markets and asset classes, interest rates, inflation etc.

This allows us to create robust portfolios for clients which are highly diversified by geography and asset type, across a wide range of economic environments. Rather than relying on one single area to generate significant returns, PruFunds use the sum of their parts to create outcomes with the right mix of assets that are well-positioned for future growth, while staying true to the funds' risk profile.

The Long-Term Investment Strategy team within LIO are responsible for the SAA review. Key to this is their own capital market assumptions for the expected returns, volatilities and correlations of the various asset classes that sit within PruFunds.

PruFund Growth Strategic Asset Allocation as at 1 May 2025.

Source, Long-Term Investment Strategy Team, M&G Life Investment Office

Expand the headings below to see the new allocations by asset class for PruFund Growth and PruFund Cautious from 1 May 2025.

We have moved into a new, more uncertain economic regime. In this environment, we expect that economic cycles will be shorter and more volatile, emphasising the need for high diversification across asset classes and regions.

While it has been unclear up to now whether Trump would make good on his campaign pledges in full, we have been wary of the shifting world order for some time. We have been carefully monitoring the rising strategic rivalry between different economic blocs that has been building for a number of years.  In our view, tariff uncertainties will ultimately result in a reduction of trade flow between the US and the rest of the world, and accelerate increased trade within and across Asia and emerging markets.

We expect that while fixed income and equities can be diversifying to each other, the prospect of ongoing inflation and financial risks makes real assets attractive. We remain committed to a broad mix of asset classes that generate real cash flows, as they provide genuine diversification in inflationary environments and are relatively uncorrelated to the economic cycle.

This content has been prepared by M&G Life Investment Office (LIO) for information purposes only and does not contain or constitute investment advice. Information provided herein has been obtained from sources that LIO believes to be reliable and accurate at the time of issue but no representation or warranty is made as to its fairness, accuracy, or completeness. The views expressed herein are subject to change without notice. Neither LIO, nor any of its associates, nor any director, or employee accepts any liability for any loss arising directly or indirectly from any use of this document. The value of investments and any income from them may go down as well as up and are not guaranteed. Investors may get back less than the original amount invested and past performance information is not a guide to future performance.

‘M&G Life Investment Office (LIO)’ includes the team formerly known as 'Prudential Portfolio Management Group' (PPMG) and 'M&G Treasury & Investment Office' (T&IO), Prudential Portfolio Management Group Limited, is registered in England and Wales, registered number 2448335.