Pru PruFund Protected Cautious Account S5

redjumpa

I have a reasonable amount invested in this fund. I took it out 10 years ago and it has performed well for me. Should I cash it in or is it to late in the present climate?

bowlhead99

It is never 'too late' to cash in an investment in something you don't want. It may of course be less optimal to sell it now than if you had thought to sell it at some point in the past, but the fact that you don't have a time machine shouldn't stop you from selling it now if you would rather have the money to do something different with it.

masonic

What are you planning to do with the proceeds? Invest elsewhere, or spend them?

redjumpa

I'm worried about losing a significant amount and really it would be a case of putting it into something very safe. Perhaps even a bank account. However, I am a complete novice and don't understand pro's (if there are any) and cons of leaving it alone.

masonic

Isn't Prufund a With Profits investment? Do you understand how it works?

redjumpa

masonic said:

Isn't Prufund a With Profits investment? Do you understand how it works?

A complete novice. No I don't I'm afraid.

Albermarle

However, I am a complete novice and don't understand pro's (if there are any) and cons of leaving it alone.

Try scrolling  through the threads for the numerous other similar questions asked recently ( and read the replies as well) 

masonic

redjumpa said:

masonic said:

Isn't Prufund a With Profits investment? Do you understand how it works?

A complete novice. No I don't I'm afraid.

With-profits funds prepare for scenarios like this by holding back returns from the good years in order to smooth out investor returns. By way of example, here is the performance of your fund vs another cautious fund:

Your PruFund is the one in blue, see how it has not been subject to the normal market swings?

Here is the same plot over the last 6 months:

Does it look like this fund suffered when the other cautious fund fell 9%? I don't think there is much chance of your PruFund falling even if Fund B starts falling again.

bowlhead99

masonic said:
Does it look like this fund suffered when the other cautious fund fell 9%? I don't think there is much chance of your PruFund falling even if Fund B starts falling again.

However, with-profits funds can have market value adjustments if you try to withdraw other than at certain key anniversaries, meaning that while the core value of the fund units keeps rising due to the application of regular bonuses, the final bonus that you can access on exit may fluctuate, meaning that the value you could extract from the fund at the end of this month may not be the same as what you could have extracted at the end of last month or the last year. Consequently if the current market level of the assets is not yet 'as bad as it gets', further falls might result in a further market value adjustment, right?

masonic

bowlhead99 said:

masonic said:
Does it look like this fund suffered when the other cautious fund fell 9%? I don't think there is much chance of your PruFund falling even if Fund B starts falling again.

However, with-profits funds can have market value adjustments if you try to withdraw other than at certain key anniversaries, meaning that while the core value of the fund units keeps rising due to the application of regular bonuses, the final bonus that you can access on exit may fluctuate, meaning that the value you could extract from the fund at the end of this month may not be the same as what you could have extracted at the end of last month or the last year. Consequently if the current market level of the assets is not yet 'as bad as it gets', further falls might result in a further market value adjustment, right?

I'm not an expert on with-profit funds, and would need to need to read the fund literature to see if and under what circumstances a MVA would apply to this fund. My understanding is that this is not a fixed term fund that matures, rather an open-ended investment with no terminal bonus. I only have any knowledge of it at all because my parents hold some.

Prudential offers a variety of these funds with different features and protections. For example, a close cousin of the fund in the thread title, namely "PruFund Protected Cautious Fund S5", has already been subject to a MVA of -8% (though there was a +3% MVA in 2010 and another in 2013), whereas the Account fund appears not to have had these MVAs applied.

By way of illustration, here are the 'Growth' versions of those two funds, which are considerably higher risk and therefore subject to more frequent adjustment. It seems the 'Account' version has more conservative smoothing so as to reduce the need for adjustments in downturns, though it's conceivable a large enough loss could cause a reduction:

Coming back on topic, I agree the OP is best talking to Prudential and perhaps withdrawing now if the money is needed within the next couple of years, but it seems to me the OP is only considering cashing in because of concern over recent stockmarket falls.

Alexland

Here is how it works on an unprotected PruFund, you can get some sharp drops

* https://www.pruadviser.co.uk/pdf/PFBS10000.pdf