The risk-graded portfolios are available as Oeics and also as unit-linked fund options within Prudential’s life and pension products. They differ from many funds of funds in that asset allocation and fund selection are split and carried out by separate companies who work together.
Prudential’s portfolio management group is responsible for asset allocation within the adventurous, balanced, cautious growth, cautious and defensive portfolios. The role of Old Broad Street Research is to research the fund universe and recommend funds for the portfolios. Prudential’s portfolio management group will then implement its asset allocation by buying and selling the funds that OBSR has recommended.
Each portfolio is monitored and managed with the aim of staying within set risk parameters. Advisers who delegate the investment management process to Prudential through these funds will be provided with regular information updates on the portfolios.
These funds have launched at a time when the Retail Distribution Review proposals have put the outsourcing of investment management by IFAs in the spotlight. However, they can be seen as the evolution of the managed cautious and managed defensive funds of funds Prudential launched in 2007, which comprise mainly of funds from the Prudential Group.
In June 2007, Hargreaves Lansdown senior analyst Meera Patel and Bestinvest’s then head of communications Justin Modray both felt that relying mainly on Prudential/M&G funds was a potential drawback in Money Marketing’s Broker Review feature. The dynamic portfolios address these concerns, but may face competition from a raft of products, including the UK retail debut from Russell Investments.