M&g Plc · LSE:MNG
M&g — M&G Prudential — Corporate Update (May 2024)
32 slides from M&g's corporate update, May 2024
Slide 1: PruFund Quarterly Update – May 2024
PruFund Quarterly Update – May 2024 Cat McInally This is for UK adviser use only
Slide 2: Important information
Important information This presentation is for adviser use only, and is based on our current understanding of taxation, legislation and HMRC practice, all of which are liable to change and subject to an individual’s own circumstances. Please remember that past performance is not a reliable indicator
Slide 3: What we will cover
What we will cover • EGRs • UPAs • Market context • PruFund performance
Slide 4: EGR decision
EGR decision • Following the usual quarterly review; EGRs have been maintained for all versions of PruFund
Slide 5: Example EGRs
Example EGRs Product Fund EGR from 28 May 2024 PruFund Growth S2 6.40% Onshore Bond PruFund Cautious S2 5.80% PruFund Growth ISA 7.70% ISA PruFund Cautious ISA 7.00% PruFund Growth Pn Ser 7.70% F Pension PruFund Cautious Pn 7.00% Ser F For full details of all EGRs: https://www.pruadviser.co.uk/funds
Slide 6: A reminder of the EGR methodology
A reminder of the EGR methodology • The EGR is an estimate of the expected investment return over the long-term, at least 15 years • Our in-house stochastic asset model is used to generate a distribution of possible future investment returns (having regard to the current asset mix in each fund) over
Slide 7: Preferable not to make frequent changes
Preferable not to make frequent changes 15 changes of EGR over 79 individual quarterly review points 8.00% 26/02/2006 25/11/2022 26/05/2009 26/11/2009 27/05/2014 25/02/2016 25/05/2023 7.00% 26/11/2012 25/08/2022 25/11/2014 25/05/2016 25/02/2022 6.00% 25/08/2016 27/08/2019 26/05/2020 5.00% 4.00% 3.00
Slide 8: EGRs – expectation and reality
EGRs – expectation and reality PruFund Growth EGR Investment date Return after 10 years at outset 25/11/2004 6.60% 6.64% 25/11/2005 6.60% 6.21% 25/11/2006 6.85% 5.74% 25/11/2007 6.85% 5.56% 25/11/2008 6.85% 7.64% 25/11/2009 6.60% 7.20% 25/11/2010 6.60% 6.21% 25/11/2011 6.60% 6.64% 25/11/2012 6.20% 6
Slide 9: Unit Price Adjustments (UPAs)
Unit Price Adjustments (UPAs) • UPAs reflect the actual past performance of each PruFund and the smoothing approach followed • They are formulaic and non discretionary • For S2 and Series B, there is a Daily Smoothing Limit and a Quarterly Smoothing Limit • For Series C, there is a Daily Smoothing L
Slide 10: UPA position 25 May 2024
UPA position 25 May 2024 Onshore Bonds – S2 PruFund Last UPA negative version UPA Growth 25/08/2023 Cautious 25/08/2023 Risk Managed 1 25/08/2023 Risk Managed 2 25/08/2023 Risk Managed 3 25/08/2023 Risk Managed 4 25/08/2023 Risk Managed 5 25/08/2023 Source: Prudential. Full details at https://www.ma
Slide 11: UPA position 25 May 2024
UPA position 25 May 2024 Pensions - Series A Wealth Platform - Series F PruFund Last UPA PruFund Last UPA negative negative version UPA version UPA Growth 25/08/2023 Growth Cautious 18/10/2022 Cautious 25/10/2023 Risk Managed 1 25/08/2023 Risk Managed 1 25/10/2023 Risk Managed 2 25/08/2023 Risk Mana
Slide 12: Quarterly UPA checks
Quarterly UPA checks
Slide 13: UPAs – a reminder of what’s required
UPAs – a reminder of what’s required • Last UPA for PruFund Growth S2, in August 2023, was -2.85% • This means the gap between Smoothed Price (SP) and Unsmoothed Price (USP) was 5.70% • SP before the UPA was 326.05p • After the UPA, the SP moved to 316.82p
Slide 14: UPAs – a reminder of what’s required
UPAs – a reminder of what’s required Use Account version of fund to remove impact of Estate Distribution in Feb 2024 332 328 Unsmoothed performance > smoothed price increase, 324 USP/SP ratio increasing 320 316 315.06 312 308 Unsmoothed performance < 304 smoothed price increase, 300.78 300 USP/SP ra
Slide 15: UPAs – a reminder of what’s required
UPAs – a reminder of what’s required Use Account version of fund to remove impact of Estate Distribution in Feb 2024 332 328 324 320 316 315.06 312 308 304 300.78 300 296 292.21 292 292.21 8/25/2023 9/14/20 23 10/4/2023 10/24/20 23 11/13/2023 12/3/20 23 12/23/20 23 1/12/20 24 2/1/2024 2/21/2024 3/12
Slide 16: UPAs – a reminder of what’s required
UPAs – a reminder of what’s required Use Account version of fund to remove impact of Estate Distribution 332 in Feb Approx growth 2024 required in USP to give a positive UPA = 330.81 330.81/292.21 = 13.2% 328 324 5% 320 gap 316 315.06 312 308 304 300.78 300 296 292.21 292 330.81 8/25/2023 9/14/20 23
Slide 17: Performance of markets since Aug 2023
Performance of markets since 25 Aug 2023 5% 0% 5% 3 -6 -8 0- 20 40 t BP t t t en G BP en en en tm d G m m m ge d n st st st es ed ge BP pa ve ve ve In v e ed G BP ur e Ja In n In H at d G ct I bl e s at e or H e ge ed ru U K ex ed ed ed S2 xi k r rp t ed g t fic ix ix ix e e to c po o or a H Y ed ty
Slide 18: The Smoothed Price performance is not the same as the Unsmoothed Price
The Smoothed Price (SP) performance is not the same as the Unsmoothed Price (USP) performance • For example; after a UPA, the SP is 100p and the USP is 97p • The USP/SP ratio is therefore 97% • After 6 months, the SP has increased by 3.5% in line with EGR to 103.5p • But the USP/SP ratio has also im
Slide 19: The Smoothed Price performance is not the same as the Unsmoothed Price
The Smoothed Price (SP) performance is not the same as the Unsmoothed Price (USP) performance 105.7p +5% 100p -5% This is a hypothetical example to illustrate the mechanics of the smoothing process. It does not represent any actual version of PruFund.
Slide 20: The Smoothed Price performance is not the same as the Unsmoothed Price
The Smoothed Price (SP) performance is not the same as the Unsmoothed Price (USP) performance 15% 105.7p +5% 4% 100p 97.2p -5% This is a hypothetical example to illustrate the mechanics of the smoothing process. It does not represent any actual version of PruFund.
Slide 21: The Smoothed Price performance is not the same as the Unsmoothed Price
The Smoothed Price (SP) performance is not the same as the Unsmoothed Price (USP) performance 15% 13% 11% 105.7p 9% +5% 7% 5% 100p 97.2p -5% This is a hypothetical example to illustrate the mechanics of the smoothing process. It does not represent any actual version of PruFund.
Slide 22: Does short term performance tell the full story?
Does short term performance tell the full story?
Slide 23: A quick reminder
A quick reminder • One of the main benefits of a smoothed fund, is the less volatile “journey” for the customer • Since 25 Aug 2023, PruFund customers have seen their smoothed price effectively increasing every day • By contrast, the ABI Mixed Investment 20-60% Share sector has seen 38% of the daily
Slide 24: PruFund performance
PruFund performance
Slide 25: Performance of PruFund Growth – 5 years
Performance of PruFund Growth – 5 years 30 26.17 25 % 21.59 20 % 15 10 9.47% 5 0 -5 -10 -15 -20 0 1 9 0 1 9 0 1 9 0 1 9 0 1 9 0 1 9 0 1 9 0 2 0 0 2 0 0 2 0 0 2 0 0 2 0 0 2 0 0 2 0 0 2 0 0 2 0 0 2 0 0 2 1 0 2 1 0 2 1 0 2 1 0 2 1 02 1 0 2 1 0 2 1 0 2 1 0 2 1 0 2 1 0 2 2 0 2 2 0 2 2 0 2 2 0 2 2 0 2 2 0
Slide 26: Performance of PruFund Cautious – 5 years
Performance of PruFund Cautious – 5 years 20 15 16.02 % 10 5 0 0.61% -5 -10 0 1 9 0 1 9 0 1 9 0 1 9 0 1 9 0 1 9 0 1 9 0 2 0 0 2 0 0 2 0 0 2 0 0 2 0 0 2 0 0 2 0 0 2 0 0 2 0 0 2 0 0 2 1 0 2 1 0 2 1 0 2 1 0 2 1 02 1 0 2 1 0 2 1 0 2 1 0 2 1 0 2 1 0 2 2 0 2 2 0 2 2 0 2 2 0 2 2 0 2 2 0 2 2 0 2 2 0 2 2 0 2
Slide 27: Performance of PruFund Growth – 3 year performance
Performance of PruFund Growth – 3 year performance 20 16.90 15 % 10 8.18% 5 0 0.77% -5 -10 -15 0 2 1 0 2 1 0 2 1 0 2 1 0 2 1 0 2 1 0 2 1 0 2 1 0 2 1 0 2 1 0 2 2 0 2 2 0 2 2 02 2 0 2 2 0 2 2 0 2 2 0 2 2 0 2 2 0 2 2 0 2 2 0 2 2 0 2 2 0 2 2 0 2 2 0 2 2 0 2 2 0 2 3 0 2 3 0 2 3 0 2 3 0 2 3 0 2 3 0 2 3 0
Slide 28: Performance of PruFund Cautious – 3 year performance
Performance of PruFund Cautious – 3 year performance 15 10 10.55 % 5 0 -5 -4.96% -10 -15 0 2 1 0 2 1 0 2 1 0 2 1 0 2 1 0 2 1 0 2 1 0 2 1 0 2 1 0 2 1 0 2 2 0 2 2 0 2 2 02 2 0 2 2 0 2 2 0 2 2 0 2 2 0 2 2 0 2 2 0 2 2 0 2 2 0 2 2 0 2 2 0 2 2 0 2 2 0 2 2 0 2 3 0 2 3 0 2 3 0 2 3 0 2 3 0 2 3 0 2 3 0 2 3 0
Slide 29: Short term performance is rubbish??
Short term performance is rubbish?? You can prove almost anything you want, if you pick the right period 4 3 3.13% 2.92% 2 2.32% 1 0.70% 0 -1 -2 -3 3 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 2 0 2 2 0 2 2 0 2 2 02 2 0 2 20 2 2 0 2 2 0 2 2 0 2
Slide 30: Annualised Volatility – 3 years
Performance vs. Volatility – 3 years Average for Average for ABI 20-60 ABI 40-85 0.18% pa 2.65% pa 16.00 14.00 12.00 Annualised Volatility 10.00 8.00 7.84 6.64 6.00 4.00 2.00 0.00 -6.00 -4.00 -2.00 0.00 2.00 4.00 6.00 8.00 Annualised Performance The chart shows the annualised 3 year performance and
Slide 31: Annualised Volatility – 5 years
Performance vs. Volatility – 5 years Average for Average for ABI 20-60 ABI 40-85 1.81% pa 4.02% pa 16.00 14.00 12.00 10.24 Annualised Volatility 10.00 8.38 8.00 6.00 4.00 2.00 0.00 -4.00 -2.00 0.00 2.00 4.00 6.00 8.00 10.00 Annualised Performance The chart shows the annualised 5 year performance and
Slide 32: Thank you for your time
Thank you for your time If you would like any further information, or support, then please contact your Prudential Account Manager