Prudential International has boosted the allocation rate offered for its guaranteed capital PruFund Protected Growth Funds range by 1%, in an effort to attract savers unhappy with conventional bank rates.
The PruFund with-profits range, available through the company’s International Prudence Bond, offers savers an estimated effective annual rate of 8%, with a rolling capital guarantee on every fifth anniversary, according to head of international sales and marketing Richard Leeson.
The minimum investment for which the extra 1% allocation will be granted is £20,000, or the euro or dollar equivalent, Leeson said.
The exact return investors will receive will depend on how skilfully Prudential’s Portfolio Management Group manages its investments, Leeson noted, adding that the downside – and upside – are limited by a so-called smoothing formula that aims to reduce fluctuations, as is normally the case with such products.
For example, if the underlying assets invested in by the fund’s managers were to fall below the so-called “smoothed value” (which is based on the effective annual rate) by more than 5% in any quarter, then the “unit price” of the fund would be reduced by only 2.5%. Similarly, a 5% rise above the smoothed value would result in a 2.5% unit price increase.
There are some provisions for exceptional circumstances, such as a “catastrophic” decline or significant outperformance in the underlying asset values, Leeson said.
The PruFund Protected Growth Funds range is available to investors in territories in which Prudential is licensed, which include the UK and Channel Islands.
