Prudential aims to increase its with-profits funds’ exposure to alternative investments but has given Brazilian forestry the chop and fine art the brush-off.
The £73bn fund has a 3 per cent holding in alternatives, the majority of which is inves-ted with US fund of hedge fund outfit Grosvenor. But Pru is recruiting a specialist to oversee alternative investment opportunities and will cast its net wider.
Investment director Martin Brookes says he is looking at catastrophe bonds – insurance-backed bonds that pay a high yield but enable the issuer to delay or stop interest payments if there is a pre-agreed event such as a hurricane or earthquake.
He is also looking at singlestrategy hedge funds, private equity, infrastructure and life settlements but was not impressed by presentations that he has attended on Brazilian forestry and fine art.
Brookes says: “We are increasing our resources’ capacity and have run the rule over a number of strategies but will only increase our exposure to alternatives gradually.”
The fund is up by 5.8 per cent in the six months to the end of June and 12.2 per cent annualised over five years.