Looking to review holdings

fjh

Linton wrote: »

The Pru Growth fund has been achieving over 6% for almost every one of the past 10 years. In the past 12 months it was 6.2%. The past year or so has been particularly difficult for investors thanks to Trump and China. Your 3 months experience means nothing.

Yes significant drop last November and every quarter since no move forward , last quarter (August) advised that they had reduced the ‘EGR’ , waiting to see what happens at next quarter review which is next month albeit I know Brexit will impact .

[Deleted User]

fjh wrote: »

Yes significant drop last November and every quarter since no move forward , last quarter (August) advised that they had reduced the ‘EGR’ , waiting to see what happens at next quarter review which is next month albeit I know Brexit will impact .

They are “smoothing” that’s all. The mechanism is described in the article I linked. They do it quarterly, so there is a lag. What it means in practice is that money from some investors is being reallocated to others, depending on the timing of investment.

fjh

Deleted_User wrote: »

The fund was established in November 2008. Market peaked a year earlier and was close to the lowest point when the Pru fund was launched. The largest single day drop happened in October 2008. It reached the bottom in March 2009 and has been trending up ever since. That’s why the Pru fund only “twitched”. Someone born in 1945 can’t claim to have suffered during WW2.

The timing of funds launch was lucky. It never experienced a bear market. While the approach will provide delay or a “lag”, the value of the fund will drop by the same amount as the rest of the stockmarket in a bear market.

Investors who are sold this fund on the pretext of the “with profits” concept will be severely disappointed. It’s a marketing ploy.

P.S. there is nothing “cautious” about the fund asset make-up. Can’t be compared to VLS 40, which really is a conservative fund.

The risk review and instruction to IFA has always been cautious so surprised / concerned at comment - which holdings do you consider not to be cautious? - just seeking help.
I have spent 12 months really trying to learn via books and podcasts - ANdy Bell DIY investor and investing Demystified by Lars Kroijer plus following podcast and Monevator and this forum which has been outstanding for help / guidance .

Linton

Deleted_User wrote: »

What are you talking about? Half of his money was invested in Prufund Growth which was launched on 25/11/2008. The only other fund with meaningful allocation is to Pru Cautious, which was launched on 25/08/2009. Why are you quoting arbitrary numbers for something else?

Neither fund has any track record for bear markets.

And no, 10 years’ of artificially smoothed returns over a bull market do not demonstrate conservatism. That’s a fallacy.

Underlying assets have less than 10% in UK fixed interest. Another 10% is in US fixed interest. The rest is in volatile assets (mostly stocks but also some property and Asian bonds). These are the kind of assets which tend to suffer during a crisis.

All WP funds operate in the same way, they are very different to OEICs/UTs. The price does not equate to the total value of all underlying assets. It is set by te fund manager at a level he believes can be sustainable in the long term. Perhaps https://www.abi.org.uk/products-and-issues/choosing-the-right-insurance/with-profits-funds/ will be of interest. It is smoke and mirrors but smoke and mirrors for a very valuable purpose - to enable risk averse investors to receive a steady on going return, better than cash or safe bonds, at some cost to the long term return. That is what cautious investors want.



Previous versions of the Prufund were extremely successful during the .com crash and the 2008 crash. There is no reason to believe that the next one will be different. When the next crash happens you will find that the OPs fund will have sufficient assets to maintain the price for some considerable time.

SonOf

The risk review and instruction to IFA has always been cautious so surprised / concerned at comment - which holdings do you consider not to be cautious? - just seeking help.

The words "cautious" can mean different things to different people. VLS40 is generally considered cautious or low/medium depending on your phrasing. Mordko considers it conservative but that is more VLS20 IMO.

[Deleted User]

SonOf wrote: »

The words "cautious" can mean different things to different people. VLS40 is generally considered cautious or low/medium depending on your phrasing. Mordko considers it conservative but that is more VLS20 IMO.

Agreed, it’s helpful to define terminology. Traditionally, a portfolio with 60% stocks and 40% bonds has been considered balanced, but plus minus 10% does not change this too much. Anything with less than 30% in high quality bonds is aggressive in my book. Anything with more than 50% in high quality bonds is cautious or conservative.

VLS40 holds 35% in equity, the rest is in investment grade corporate or government bonds from the developed world. Some of the bonds are hedged, some are exposed to currency fluctuations.

Whichever way we want to call it, I would bet on VLS 40 having less of a drawdown than PruGrowth in a bear market.

[Deleted User]

Previous versions of the Prufund were extremely successful during the .com crash and the 2008 crash. There is no reason to believe that the next one will be different. When the next crash happens you will find that the OPs fund will have sufficient assets to maintain the price for some considerable time.

Unfortunately, I know very well what a “with profit” fund is. Past performance of a different fund with a different manager but of the same brand has even less relevance to future performance than when people pick a hot fund based on its own past performance.

SonOf

Whichever way we want to call it, I would bet on VLS 40 having less of a drawdown than PruGrowth in a bear market.

Pru are probably the only company that have successfully smoothed returns. They have done it for generations. The current version (prufund) is not one I am particularly a fan of due to its higher charges. The 90s and early 2000s versions could be got with capital security for 1% a year all in.

We have people that were in it pre dot.com and gone through that and the credit crunch and barely seen any drawdown. So, I would expect VLS to have greater voltility and a higher drawdown in most scenarios. I would expect VLS40 to have a greater upside in growth periods.

Thrugelmir

cfw1994 wrote: »

I appreciate we are in a period now of lower returns....perhaps for some time.....
......but if the funds are averaging 6.5% ps, and costs/fees are under 1%, presumably a 3% draw should be VERY comfortable, right?!

Even 4-4.5% might be safe, notwithstanding some ability to perhaps avoid withdrawals should there be a downturn impacting the pot.

Fixed income stocks offer no capital growth. Your portfolio maybe challenged to meet these objectives as time passes.

fjh

Thrugelmir wrote: »

Fixed income stocks offer no capital growth. Your portfolio maybe challenged to meet these objectives as time passes.

Pardon my ignorance but wasn’t aware I had fixed income stocks in this portfolio?