At the latest quarterly review of the PruFund range of smoothed investments, the PruFund Growth Fund has applied a downward Unit Price Adjustment (UPA) of-2.63%. This affects investments in some pension products, (Series A Trustee Investment Plan) ISAs and offshore bonds (Series B). All other versions of PruFund such as Cautious or investments in Onshore Bonds are not affected. Retirement Account Series E is also not affected by this UPA.
At the same time the Prudential With Profit Fund announced a windfall profit that will be added to eligible PruFund investments so that the share price has increased by 0.9% on the 28th February 2023.
Therefore, overall the PruFund Growth Fund has fallen by -1.73%.
The share price increase of 0.9% will be added to the PruFund Cautious as well and will benefit any investors who have bought into the fund (Growth or Cautious) in the last quarter.
Its been a tumultuous time on the worlds investment markets over the last 12 months and is similar to 2008 during the height of the Financial Crisis, in that bonds and fixed interest values fell alongside equities. The PruFund Growth fared better than almost all of its peers during the last 12 months and beyond and below is a chart of performance against HSBC Global Strategy Balanced which is the same risk profile.
So, even with this short term reduction in the share price the PruFund Growth still delivered +4.52% over the last 12 months.
What Was the Reason for the Reduction?
The performance of the PruFund is supported by the underlying investments of the fund that drives returns and put simply, the performance of the underlying assets over the last quarter did not support the rates of return on the smoothed fund. You can see how the HSBC suffered the in February after a strong start to the year.
Going forward the PruFund Growths expected growth rate is 7.3% pa which is the Pru’s view of long term growth rates of the investments that underpin the PruFunds smoothed return.
Should you require further information, please do not hesitate to contact your Adviser.
Phil J McGovern FPFS
Chartered Financial Planner
