Prudential With-Profits Fund performs well in a fast moving economic climate

During 2023 concerns over inflation and interest rates continued, and market conditions changed quickly and often, but overall most equity and fixed interest markets proved resilient. Our with-profits customers have benefited from investing in a multi-asset, globally diversified fund during this period, with our fund managers taking advantage of the globally diversified nature of the Fund to seek out, and benefit from, opportunities across a wide range of different asset types. A positive return of 4.3% (gross of tax) was achieved.

In some respects, 2023 was a reversal of the extremely challenging investment markets of 2022. 

Overall, it was a resilient year for major capital markets as economies defied the worst of economic forecasts. However, much of this positivity was concentrated into the final quarter with significant market rallies in November and December; across both equities and fixed interest, with the rest of the year looking much less certain by contrast. Some of the reasons were:

• For much of the year, markets were dominated by fears of recession, high inflation and interest rates as well as a variety of geopolitical challenges. 
• Following an unsettled first quarter, with fears of an emerging banking crisis that proved unfounded; economic data proved resilient, and markets benefited as growth forecasts were steadily revised higher, beating the many expectations of recession that were being made at the start of the year. 
• As Autumn arrived, some notable downside surprises on inflation led to a shift lower in the interest rate outlook, leading to a strong rally in both equities and fixed interest across most, but not all, global markets.
• However, the strong end to 2023 has arguably left valuations more vulnerable to disappointment over the interest rate outlook, with risk premia at relatively tight levels.

Our With-Profits Fund invests in a globally diversified portfolio of assets so captured positive returns from a wide range of underlying investments. Some of these gains were offset by the overall performance of some of our property and private assets. The investment teams will continue to source and invest in assets that build diversification and help meet the objective of securing the highest total return for the Fund (after any tax and investment expenses) while maintaining an acceptable level of risk and protecting our customers. We’ll also continue to implement Environmental, Social and Governance (ESG) considerations into everything we do, from asset allocation to fund manager selection.

The value of any investment can go down as well as up so your customer might not get back the amount they put in. Past performance is not a reliable indicator of future performance.

What the Fund is invested in

As at 31 December 2023 and 2022, the main asset pool within the Prudential Assurance Company Limited With-Profits Fund had the following asset allocations:

Source: Prudential

Clive Bolton, Chief Executive Officer, M&G Life, said: “The Prudential With-Profits Fund delivered a strong return in 2023 despite a fragile geopolitical landscape and challenging market backdrop. Our global diversification paid off as most of our fixed income and regional equity portfolios performed well. Our cautious, long-term investment approach keeps providing good customer outcomes and looks to protect those customers from short term adverse movements in markets.

The Fund is one of the most financially robust with-profits funds in the UK, giving us the ability to invest in a wide range of assets and companies. We will keep an eye on markets and the risks that emerge over 2024 to best position the Fund to deliver for our customers.”

More information on the 2024 With-Profits Bonus Declaration is available here