Prudential Fund

mikewp

I have been recommended The Prufund Cautious Fund ISA as a good investment in the current economic climate. Any opinions as to whether this would be the right fund at the right time ? 

dunstonh

I have been recommended The Prufund Cautious Fund ISA as a good investment in the current economic climate.

Why?  As in why is it better in the current economic climate.     As investing is a long term thing, you could argue that actually its not the investment to be in at this particular point. 

Any opinions as to whether this would be the right fund at the right time ? 

Its a niche fund aimed at low knowledge consumers not willing to learn about investing.    Its an option used far too much by some lazy advisers.
it certainly has its place but is oversold to people that could do much better if they just put in an effort to understand (or their adviser puts that effort in).    

masonic

Why would someone invest in an expensive fund that is supposed to provide more stable returns than a comparable fund with greater transparency, but has just been subject to a market value reduction of nearly 10%, and could be subject to further such reductions in the coming weeks? If you want a cautious investment, there are much better options.

Who recommended that you should invest in this fund at this particular time?

mikewp

Thanks for your comments. It was my financial advisor that has been recommending the fund for the last 4-5 months and he considered it to be a very good lower risk investment product. He advised that "the fund offers a net of charges expected growth rate of 3.6% pa plus a negative unit price reduction of 4.5% in November 2018 and a recent -9.5% unit price adjustment down in lieu of global sell off. This created a 14% plus upside by just reversing the unit price adjustments as markets recover" I am not an experienced investor as you will tell by my query. Any advice on the "better options" please

masonic

His comments are equally true of other funds that have fallen recently and may recover. Though he seems to be assuming that the market value adjustment of this fund was made for no good reason; this is very unlikely to be the case. The fall most likely reflects a fall in the underlying assets of the fund and therefore the "14% plus upside" is by no means a given - it will depend on the performance of the investments from here, and these could fall further, or stay low for a protracted period. The same is true of any investment fund.

"Better options" would depend what you are trying to achieve and the level of risk you'd be comfortable with, but there are several low cost multi-asset funds that could be considered, some of which come up rather frequently in discussions. But maybe the first step is another conversation with your adviser along the lines of "What's the point of investing in a fund with smoothing when it can fall just as far as a comparable fund without during a crash? Wouldn't it be cheaper for me to invest in a simple multi-asset fund?"