Aviva has said it is ‘pretty irritating’ to see the amount of business which Prudential writes with its PruFund range, as it prepares to launch a competitor.
The PruFunds range use the with-profits format with pooled investments providing regular bonuses for investors which hold back growth in positive years to try and smooth out market volatility. Prudential now largely dominates the space with it holding roughly 30% of the market in 2015, according to data from research firm AKG.
In June New Model Adviser® revealed that Aviva was preparing to launch its own fund to challenge the PruFund. According to a fund proposition document the fund will offer an all in fee of just under 1% and will launch on the Aviva platform later in the year.
Speaking to New Model Adviser® following the publication of Aviva's half year results, Aviva’s UK chief financial officer Jason Windsor said the insurer is frustrated at how successful the PruFund range has been and as such Aviva wants to get into this space.
‘It is pretty irritating to watch Prudential write so much business in a market that we think we are more than able to write business in,’ he said.
Windsor added Aviva feels it can do well in this space so it is natural for it to launch products aimed at smoothing investment returns.
‘So it is logical that with a strategy hat on to say “customers are buying that product we should be competing”. So we decided to start piloting a few ideas; we haven’t committed to anything yet but we have one or two things we might try. The customer need is there and we are a very capable asset manager and I would hope we would be able to compete effectively in that market and offer a suitable product,' he said.