5. Show clients the power of diversification
A big appeal that cash has over investment is that its nominal value doesn’t fall. Shares, on the other hand, can see daily movements up and down in their price.
Client concerns about such volatility can be addressed by showing how allocating across different asset classes, markets, industries and themes can smooth out market movements, as rises in one area can potentially offset falls in another.
Some funds give your clients access to very specialist investments which add greater diversity. These can include investments in infrastructure in the UK, such as government projects, as well as a diverse range of global developments, including investments in renewable energy, utility service providers and large, economically and socially important investments.
If market ups and downs are a persistent concern, clients might be interested in solutions like PruFund. PruFund from Prudential is known as a multi-asset fund which invests in a wide range of different assets like shares, property, bonds and cash. PruFund aims to balance the performance of the various assets.
PruFund aims to grow clients’ money over the medium to long term (at least 5 to 10 years) with a view to providing them with a smoother investment journey.
That’s thanks to an established smoothing mechanism and multi-asset approach; achieved through being part of Prudential’s With-Profits Fund. This aims to spread the risk to your clients’ investment, which can help provide less potentially volatile returns.
Like most investments, the value of the underlying funds change daily, up or down. PruFund’s smoothing mechanism aims to reduce the impact of these movements over the short term, using Expected Growth Rates and where required, Unit Price Adjustments, to deliver a smoothed investment journey.
Prudential sets Expected Growth Rates (EGRs); these are yearly rates your clients’ investment will normally grow at. They reflect Prudential’s view of how it expects the underlying assets of the PruFund funds to perform over the long term (up to 15 years).
While the EGR reflects Prudential’s long term view, Prudential also needs to check that the fund is performing as expected; if not an adjustment may be needed to your clients’ fund value, either up or down. These are called Unit Price Adjustments (UPAs) and there are limits which set out when one would be required.
