Prudential to launch PruFund Cautious fund

The new version of the PruFund will be officially launched on the 13 July and will act as a smooth managed fund. It is aimed at those investors who are risk averse.

Trevor Cheal, market and proposition director at Prudential, said after five successful years of running the PruFund Growth version, the firm has now decided to launch a new cautious option, with a different mix of asset allocation.

Very similar to the original PruFund Growth version, which has £1.15bn invested to date, the new fund, although a with-profits fund, acts like a smooth managed fund.

Cheal said: "We estimate how much it will grow by and give consumers that estimated growth rate, and as long as the underlying fund stays within plus or minus 10 per cent of that estimated growth rate, we keep delivering that rate to consumers."

"The PruFund Cautious fund, is going to have a heavier weighing towards fixed interest and cash, about 70 per cent of it being fixed interest and cash and 30 per cent will be in equities and property."

Cheal said that the idea behind the new fund was that there was more and more demand from consumers for lower volatility, and lower risk portfolios.

Cheal said: "Consumers and adviser now have a choice as to how much level of risk they would like to take and how much volatility they would to see."

At the same time as launching the PruFund Cautious, Prudential are also launching a five-year investment guarantee alongside the contract.

Cheal added: "Currently we offer a five-year guarantee on the growth version, that is being withdrawn and we are now introducing the five-year guarantee on the cautions version.

"There is an annual charge of 0.75 per cent, for the guarantee, however for the first six months of the year we are offering a discount of 0.25 per cent per annum so you actually buy the guarantee at 0.5 per cent per annum."

Cheal said that the current estimated growth rate on the fund was 6.1 per cent, and this will get assessed every quarter by looking at the underlying assets and there long-term outlook.