Investments  

Pru adds £2bn to with-profits policy values

Pru adds £2bn to with-profits policy values

Prudential has announced it has added £2bn to with-profits policy values in 2015.

Aki Hussain, chief financial officer at Prudential UK & Europe, said this highlighted the returns available to cautious investors from a financially strong and well-managed with-profits fund.

Prudential’s With-Profits fund has delivered a cumulative investment return of 80.8 per cent over 10 years compared with the FTSE-All Share (total return) index return of 71.8 per cent over the same period.

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Talking generally about with-profits funds, Alan Solomons, director of London-based Alpha Investments & Financial Planning, said: “Back in the 1980s I used with-profits funds, then came the recession of the 1990s. I had a series of portfolios of traded endowment policies and a client called up and said they had lost money.

“We were getting an average of 7 per cent return and I didn’t believe the client. We had two years to run on a 25-year policy so in theory, with smoothing, we should have had a terminal bonus that was relatively unscathed.

“But the company [not Prudential] had reduced the terminal bonus four times. It had overpaid out when it should have been retaining surplus funds for when times got hard, and my conclusion was that you cannot trust products which are not transparent.”

Note: This story has been amended to clarify that Mr Solomons was not talking about Prudential