Prudential is launching a range of five actively-managed, risk-rated multi-asset fund-of-funds in its on and offshore product ranges.
The Prudential Dynamic Portfolio – which opens to direct investment on Friday and through on and offshore wrappers the following Monday – is designed to enable financial advisers to benefit from the asset allocation, research and risk-rating skills of its in-house experts as well as those of Old Broad Street Research (OBSR).
Summarising the new funds’ key selling point, Prudential director of investment funds Andy Brown said: “They are being run to a risk target [rather than] a return target.”
The five fund-of-funds portfolios have names that reflect their respective risk levels: Defensive, Cautious, Cautious Growth, Balanced and Adventurous.
From Monday, the new, UK-domiciled OEICs will become available on a range of Prudential products, including the International Prudence Bond as well as the Prudential personal pension, income drawdown and onshore and offshore bond ranges.
Response to RDR,TCF
Prudential said the Dynamic Portfolio funds were a response to demands from advisers for investment products that “can help them respond to the changes driven by the Retail Distribution Review and the ongoing focus of the Financial Service Authority’s Treating Customers Fairly initiative”.
“In addition, customers will benefit from the choice of a wide range of funds across tax wrappers that are designed to meet the needs of identified groups, and are targeted accordingly,” Prudential said in a statement.
Portfolio Management Group
Prudential’s Portfolio Management Group (PMG), which looks after more than £100bn worth of investments, is responsible for the asset allocation of the five new funds, while OBSR, the London-based ratings agency and consultancy, is handling the risk profiling, as well as the selection of the funds used.
OBSR will also be responsible for blending decisions, and will be able to introduce “tilts” to the portfolio through manager style and market capitalisation, Prudential said.
Although they are fund-of-funds, the five new Prudential portfolios are competitively priced, according to Brown, adding that they are being made available to investors at a flat 1.4% annual management charge. This would typically result in a total expense ratio of around 1.7%, he said.
Each of the five new fund portfolios will contain around 14 to 20 funds. Some of the funds currently held include the M&G Property Portfolio Fund, Gartmore European Selected Opportunities Fund, Jupiter European Special Situations Fund, and Old Mutual Corporate Bond Fund.
Continuation of OBSR partnership
The Dynamic Portfolio is a continuation of a partnership between Prudential and OBSR that dates back to the launch about 18 months ago of the PruSelect fund range. This features some 100 ‘best of breed’ funds aimed at reducing costs for advisers and enabling clients who are nervous about using open architecture products to benefit from a pre-selected range of risk-rated funds.
Information about the Dynamic Portfolio range is expected to be made available, once the funds are launched, on the Prudential investment website, www.pruadviser.co.uk.
