The recent article in Money Marketing headlined, Hartford’s hits and myths of retirement raises the issue of with-profits funds moving away from equities in market downturns but fails to consider the counter-argument when markets rally.
It is evident that some companies are not as well positioned as others because of their “reading” of equity markets but the article demonstrates that the statements quoting Prudential are made without full analysis of the evidence.
Prudential’s with-profits fund has consistently performed irrespective of market cycles. Over the last five years to June 30, 2006, our with-profits fund has delivered a total pre-tax return of 48.9 per cent compared with the return on the FTSE All-Share (Total Return) index over the same period of 27.8 per cent.
I am sure Mr Enos would not have said what he did if he had been made aware of the facts behind Prudential’s tremendous performance track record – something that has been recognised and endorsed by a number of market commentators.
The ability to move between asset classes “at will” is vital to provide the level of long-term return that is expected by our policyholders. Is this different to what investors in multi-asset managed funds expect of their fund managers?
Prudential has a tried and tested tactical asset allocationand valuation process. By applying this actively and consistently, we have delivered significant levels of performance throughout the heady days of the 90s to the desperate uncertainty of the early part of this decade. The multi-asset active management and asset allocation expertise of Prudential’s Portfolio Management Group is widely recognised and it is far too simplistic to assume that such skills will evaporate if there are difficult markets again in the future.
The comments regarding treating customers fairly can only be considered a sweeping generalisation and are unhelpful. A with-profits fund, like any other multiasset fund, when appropriately managed does not and should not remain rooted in asset classes that are overvalued. Having the investment flexibility to move between assets that offer best value is necessary and should be expected of a multi-asset fund that is being managed actively and properly. By altering the asset allocation, a fund does not suddenly “change entirely from the product that the customer originally invested in”.
By successfully implementing investment strategies, based on investment market views, Prudential has preserved the financial strength of its fund and delivered excellent long-term investment return.
Wealth management development manager,