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Investment Insights

2025 PruFund Planet Strategic Asset Allocation

Last Updated: 21 Aug 25 10 min read

By Life Investment Office (LIO)

A forward-looking, evolving approach to strategic asset allocation

We regularly review our Strategic Asset Allocation (SAA) framework against our long-term capital market assumptions, taking into account a range of potential future scenarios. This includes both a range of qualitative scenarios and outputs from our in-house, stochastic modelling tool, GENESIS, which simulates thousands of possible outcomes across capital markets, asset classes, interest rates, inflation etc.

This forward-looking approach enables us to construct robust, globally diversified portfolios that are resilient across a variety of market conditions for clients. Rather than relying on any single asset class or region to drive returns, the PruFund Planet range is designed to harness the collective strength of a well-balanced mix – positioning our clients for long-term growth, while staying true to the funds’ individual risk profiles.

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

Contents

1. Overview

2. Key changes

3. Asset Allocations

4. Outlook

Overview

  • As part of the annual review process, we have evaluated the Strategic Asset Allocation positions to ensure the fund ranges remain well aligned with evolving market conditions and customers attitude to risk expectations
  • The funds continue to benefit from strong diversification and the strategic asset allocation adjustments made in recent years. As a result, only minor refinements are being implemented for 2025
  • We remain vigilant in monitoring global developments and market dynamics, and continue to adjust our positioning where appropriate – seeking to capture valuation opportunities while managing risk levels

Key changes

Fixed Income

  • We have implemented a meaningful decrease in our Global High Yield positions in response to persistently compressed risk premiums and the limited scope for outperformance
  • We have slightly reduced our US Treasury exposure, reflecting concerns over current financial challenges and potential economic impact of tariffs and trade war on the US economy
  • We have increased our allocation to Indian Fixed Income, driven by attractive real yields, strong growth prospects, and the diversification benefits within emerging markets

Equities

  • We maintain a marginal preference to UK and European equities. The UK has shown relative resilience to trade and inflation shocks, while Europe benefits from a combination of fiscal stimulus, monetary policy flexibility and improving economic fundamentals
  • Conversely, we are slightly reducing our US equity exposure, due to rising uncertainty around the sustainability of US exceptionalism. Political instability, fiscal concerns and trade-related headwinds are clouding the outlook
  • Our equity positions remain focused on capturing long-term global growth potential rather than mirroring current market capitalisation. We continue to emphasise geographical diversification to mitigate concentration risk and navigate rising macroeconomic uncertainty

Real Estate, Alternatives and Other Strategies

  • We continue to diversify our real estate exposure, reducing UK allocations in favour of a broader international basket. This reflects stabilising global real estate markets, improving transaction volumes and renewed sense of investor optimism
  • Our commitment remains focused on broadening the asset mix to include investments with tangible cash flows – such as infrastructure, transport and real assets – which offer effective diversification and inflation protection
  • We are building positions in strategies that exhibit low correlation to the economic cycle, such as volatility arbitrage, cross-asset class momentum and royalty based investments. These strategies provide differentiated sources of return and enhance portfolio resilience to economic uncertainty

Asset Allocations

The headings below show the new allocations by asset class for PruFund Planet Funds 1-5 from 01 July 2025.

Equities

Asset

Planet 1

Planet 2

Planet 3

Planet 4

Planet 5

UK

3.36%

(+0.14%)

6.30%

(+0.29%)

9.24%

(+0.37%)

12.32%

(+0.56%)

16.24%

(+0.84%)

Europe ex UK

1.44%

(+0.27%)

2.70%

(+0.52%)

3.96%

(+0.74%)

5.28%

(+1.01%)

6.96%

(+1.36%)

North America

2.79%

(-0.02%)

5.23%

(-0.01%)

7.67%

(-0.07%)

10.23%

(-0.03%)

13.49%

(+0.05%)

Japan

0.75%

(-0.07%)

1.41%

(-0.12%)

2.06%

(-0.20%)

2.75%

(-0.24%)

3.63%

(-0.30%)

Asia ex Japan

2.52%

(-0.05%)

4.73%

(-0.08%)

6.93%

(-0.17%)

9.24%

(-0.17%)

12.18%

(-0.14%)

Global Emerging

1.14%

(+0.03%)

2.14%

(+0.06%)

3.14%

(+0.07%)

4.18%

(+0.12%)

5.51%

(+0.19%)

Total Equities

12.00%
(+0.30%)

22.50% (+0.66%)

33.00%
(+0.74%)

44.00%
(+1.25%)

58.00%
(+2.00%)

Real Estate

Asset

Planet 1

Planet 2

Planet 3

Planet 4

Planet 5

UK

6.15%

(-0.23%)

7.15%

(-0.27%)

7.98%

(-0.30%)

8.31%

(-0.31%)

8.31%

(-0.83%)

Europe ex UK

0.93%

(+0.12%)

1.08%

(+0.13%)

 

1.20%

(+0.15%)

1.25%

(+0.16%)

1.25%

(+0.09%)

North America

0.93%

(+0.12%)

1.08%

(+0.13%)

1.20%

(+0.15%)

1.25%

(+0.16%)

1.25%

(+0.09%)

Asia

1.25%

(/)

1.45%

(/)

1.62%

(/)

1.69%

(/)

1.69%

(-0.10%)

Total Real Estate

 9.30%
(+0.01%)
 		 10.80%
(-0.01%)		 12.00%
(/)		 12.50%
(+0.01%)		 12.50%(-0.75%)

Alternatives

Asset

Planet 1

Planet 2

Planet 3

Planet 4

Planet 5

Private Equity

3.58%

(+0.34%)

3.66%

(+0.34%)

3.75%

(+0.36%)

3.75%

(+0.29%)

3.75%

(+0.29%)

Infrastructure

3.58%

(+0.34%)

3.66%

(+0.34%)

3.75%

(+0.36%)

3.75%

(+0.29%)

3.75%

(+0.29%)

Private High Yield

4.30%

(-0.02%)

4.39%

(-0.03%)

4.50%

(-0.02%)

4.50%

(-0.12%)

4.50%

(-0.12%)

Total Alternatives

11.50%
(+0.66%)

11.70%
(+0.65%)

 12.00%
(+0.70%)
 

12.00% (+0.46%)

12.00% (+0.46%)

Other Strategies

Asset

Planet 1

Planet 2

Planet 3

Planet 4

Planet 5

TAA Mandate

3.00%

(+0.04%)

3.25%

(+0.04%)

3.50%

(+0.04%)

4.00%

(+0.04%)

4.25%

(+0.04%)

Total Other Strategies

 3.00%
(+0.04%)

3.25%
(+0.04%)

3.50%
(+0.04%)

4.00%
(+0.04%)

4.25%
(+0.04%)

Fixed Income

Asset

Planet 1

Planet 2

Planet 3

Planet 4

Planet 5

UK Government Bonds

3.60%

(-0.06%)

2.91%

(-0.08%)

2.22%

(-0.28%)

1.55%

(-0.38%)

0.73%

(-0.25%)

US Government Bonds

2.16%

(-1.06%)

1.75%

(-0.76%)

1.33%

(-0.50%)

0.93%

(-0.31%)

0.44%

(-0.16%)

Europe including UK

18.02%

(-0.15%)

14.57%

(+0.43%)

11.10%

(+0.75%)

7.73%

(+0.73%)

3.68%

(+0.31%)

US Investment Grade

7.78%

(-1.53%)

6.29%

(-0.95%)

4.80%

(-0.51%)

3.34%

(-0.25%)

1.59%

(-0.14%)

US High Yield

0.86%

(-0.03%)

0.70%

(/)

0.53%

(+0.02%)

0.37%

(+0.03%)

0.18%

(+0.01%)

Asia

13.21%

(+1.00%)

10.68%

(+0.70%)

8.14%

(+0.44%)

5.67%

(+0.17%)

2.70%

(-0.11%)

Leveraged Loans

2.10%

(+0.58%)

1.70%

(+0.33%)

1.30%

(+0.14%)

0.90%

(+0.01%)

0.43%

(-0.06%)

Private Credit

3.90%

(+0.55%)

3.16%

(-0.09%)

2.41%

(-0.39%)

1.67%

(-0.53%)

0.80%

(-0.46%)

Global High Yield

2.40%

(-0.19%)

1.94%

(-0.68%)

1.48%

(-0.83%)

1.03%

(-0.83%)

0.49%

(-0.59%)

Emerging Market Debt

6.01%

(-0.10%)

4.86%

(-0.26%)

3.70%

(-0.34%)

2.58%

(-0.38%)

1.23%

(-0.32%)

Total Fixed Income

60.10%

(-1.00%)

48.60%

(-1.36%)

37.00%

 (-1.50%)

25.80%

(-1.74%)

12.30%

(-1.77%)

 

Asset

Planet 1

Planet 2

Planet 3

Planet 4

Planet 5

Cash

4.25% (/)

3.25% (/)

2.50% (/)

1.75% (/)

1.00% (/)

 

Source: LIO as at 01.07.2025 – please note that not all figures may tally to 100% due to the effects of rounding.

Outlook

We have entered a new and increasingly uncertain economic regime, characterised by shorter, more volatile cycles and heightened geopolitical risk. In this environment, the importance of robust portfolios with diversification across asset classes, regions and return drivers remains key.

The recent escalation is US trade tariffs under the Trump administration has intensified global uncertainty, weighing on investor confidence and trade flows. While the full extent of these policies is still unfolding, we have long anticipated a shift in the global order. Strategic rivalry between major economic blocs continues to reshape global trade dynamics, with a likely acceleration of intra-Asia and emerging market trade as the US becomes more inward looking.

Markets are expected to remain highly sensitive to further policy and geopolitical developments. Against this backdrop, we believe traditional diversifiers like fixed income and equities still have a role to play, but the case for real assets and alternative strategies is strengthening. In particular, assets with tangible cash flows and low correlation to the economic cycle, such as infrastructure, royalties, and volatility strategies – offer valuable diversification, especially in an environment of persistent inflation and elevated financial risk.

We remain committed to a broad, balanced, and forward-looking asset mix that is designed to weather uncertainty and capture long-term growth opportunities.

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), Prudential Portfolio Management Group Limited, is registered in England and Wales, registered number 2448335.

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