Prudential is adding a Cautious contract to its range of PruFunds single premium with-profits mandates.
Managed by Portfolio Management Group, led by Martin Brookes, PruFund Cautious will launch on 13 July with a target asset allocation of 70% fixed income and cash and 30% in equities and property.
The fund, established in response to investor demand for lower risk, lower beta products, will pay out 6.1% gross annual yield (after tax), which is smoothed within a 10% variance either side of this level.
"If the underlying portfolio moves either 10% higher or lower than the 6.1%, we will still pay out 6.1%. However, if the markets move beyond the 10% level, we will carry out a unit price adjustment and the investor will either make or lose money according to that UPA calculation," says market and proposition director Trevor Cheal.
A five-year capital guarantee will also be offered at an annual charge of 0.75%, but Pru is offering this at a discounted rate of 0.25% for investors buying the fund any time before the end of 2009.
In addition, PruFunds Growth portfolio, which passes its five year anniversary this year, will see the capital guarantee removed for new investors, with the group saying it was failing to offer value for money as equity markets started to collapse. Pru will continue to honour those taken up since it launched four years ago.
These changes will only apply initially to investments in its onshore bond, with plans to roll out the changes on both Growth and Cautious to its offshore bond, personal pension and income drawdown vehicles later this year.
