One of Prudential's range of PruFunds has seen a fall in its unit price on the back of a torrid October for global equity markets.
The PruFund 40-80 Pension Fund (RA) Series E, one of the more adventurous in the PruFunds range, saw a unit price adjustment of -2.5% on 25 October.
Unit price adjustments are rare occasions for the range. The PruFund 40-80 Pension Fund Series A for example has not had a unit fall since it was launched in November 2013.
This version of the PruFunds (PruFund 40-80 Pension Fund (RA) Series E), uses a monthly valuation calculation method, whereas other funds use quarterly unit price checks.
The fund, which was only launched in September 2017, also has the highest exposure to equities out of the range.
October was a torrid month for global markets, with the FTSE All Share down 7.4% and the S&P 500 down 7% from 25 September to 24 October. Other funds in the PruFunds range which use quarterly unit price checks have not yet had a unit price adjustment.
Paul Fidell, investment business development manager at Prudential, said: ‘The correction mechanism of the fund is performing as designed with the non-discretionary formula making a correction, largely driven by recent equity performance.
'It was applied to PruFund 40-80 Series E only – this version having the highest equity content. The key is the performance since launch and, even allowing for the unit price adjustment, investors have been protected during a period of very high volatility – the fundamental point of smoothing in a nutshell.’
Post-pension freedoms the PruFunds range has grown to a giant, with it amassing £35.9 billion of assets as of the start of 2018. The fund has also taken in a large amount of assets from defined benefit (DB) transfers.
Clare Bousfield, Prudential’s UK insurance chief executive, said in 2017, PruFunds has been ‘very strong in pension transfers'.
Fidell has previously told New Model Adviser® the range is not immune from a market downturn.