M&G Prudential has launched a new high-growth PruFund as it overhauls 14 of its existing funds, with charges going down by 1% in some cases.
Pru's new Risk Managed PruFund 5, which will be available from 21 January, has an expected growth rate of 6.6% for the pension – the highest of any PruFund.
In addition, as first reported by New Model Adviser® last December, Pru has today confirmed it is overhauling three fund ranges with 14 refreshed funds getting price cuts. The changes will see Legal & General Investment Management (LGIM) dropped for BlackRock iShares.
The Oeic range, LF Prudential Dynamic Portfolio, is being renamed LF Prudential Risk Managed Active range and will cut the ongoing charges figure (OCF) from 1.45%-1.65% to 0.55%-0.57%.
The LF Prudential Dynamic Focused Portfolio range is being renamed LF Prudential Risk Managed Passive range with its charges falling from 0.85%-0.95% to 0.25%-0.26%.
The fund-of-funds, the Prudential Risk Managed PruFund range, will keep its name and see its charges go up slightly from 0.72%-0.82% to 0.72%-0.84%.
The three strategies of the new PruFolio Risk Managed range will be passive, active and smoothed (PruFunds).
In addition, Pru is changing the Oeic funds’ objectives to move from a maximum equity exposure to a volatility ceiling, which will allow fund managers more flexibility with asset allocation.
Paul Fidell (pictured), senior business development manager for investments at Prudential, said the changes were driven by the need to give the Oeic funds a ‘midterm refresh, in particularly over the costs’.
He also said the changes were part of Pru and M&G ‘collaborating’ more closely since the two companies merged in 2017.
‘We have subtly changed not the way we manage money but how we are delivering the asset allocation,’ he said. ‘Instead of using Morningstar and a full range of external fund managers, we are going in house and will use as many M&G funds as we can because that is an efficient way of delivering asset allocation.
‘It is about collaboration, refreshing the fund range, making it more appropriate for today’s market and dramatically reducing the charges,’ said Fidell. ‘We are embracing a bit more of the passive side of things so we can compete in the market as well.’
On the passive side, Pru is going to drop LGIM, which currently runs around £100 million for the Oeic range, and replace it with BlackRock’s iShares, Fidell said.
Asset allocation for the three fund ranges will be delivered by the M&G Prudential Investment Office – formerly the Prudential Portfolio Management Group.
The Oeic funds will be available on 28 platforms while the PruFunds will only be available on Pru’s pension, ISA and bond wrappers.