Prudential is switching its £192m managed defensive and £62m cautious managed growth funds from active to passive and launching three new passive funds.
Investment director Andy Brown says the change to the managed defensive and cautious managed growth funds will take place at the start of July.
He says: “We will change the two funds from an active strategy to a passive strategy by replacing the assets with tracker funds and ETFs.”
Brown says the market is looking for passive solutions that do not carry manager risk and investors will be looking for lower-cost solutions after the RDR. He expects the total exp-ense ratio on the managed def-ensive and cautious managed growth funds to fall by up to 25 basis points.
Pru also plans to launch cautious, balanced and adventurous passive funds in the next 18 months that mirror the active funds in its dynamic portfolios.
Hargreaves Lansdown senior analyst Meera Patel says: “I hope that there will not be any more passive fund launches, there are already thousands of funds and there is not much to differentiate them in terms of performance.”