Changes to the PruSelect Fund Range

Managed by Iain Stewart, OBSR continue to be impressed with his thoughtful, pragmatic and risk aware approach which has led to a consistent delivery of his long-term performance objective.

OBSR will seek a meeting with Threadneedle to discuss the fund as soon as possible.

The previous manager, Ben Thompson, has decided to leave the company to pursue a career outside the industry. The fund is now managed by Robert Baltzer and Donald Phillips. Mr Baltzer is a lead investment manager within the Corporate Bond team and has been at Baillie Gifford for nine years. Mr Phillips is an investment manager in the team and joined the company two years ago. The Corporate Bond team works with a strong team culture; the process underpinning the fund has not altered and has been successful over time. Following a meeting with Baillie Gifford, OBSR are happy to maintain an OBSR Fund Rating but have made this adjustment in acknowledgement of the management change.

OBSR will be meeting with Philip Wolstencroft, who will take over the fund, to review the mandate at the earliest opportunity.

The fund previously held an AA Rating. OBSR explained that this upgrade is in acknowledgement of the strength of the investment approach, the experience of the fund manager, Graham French, the depth of resource within the Global team, and the consistently strong risk adjusted returns that have been delivered since the manager took over the mandate in November 2000. In addition OBSR believe, Mr French's long-term investment approach in selecting companies that allocate capital sensibly and are respectful of shareholders is consistent with his focus on creating value for unitholders as well as protecting their capital. Based on this, OBSR now believe the fund merits an AAA Rating.

OBSR will be meeting with Nick Kirrage and Kevin Murphy, the new managers, to review the fund at the earliest opportunity.

Rob Baltzer and Donald Philips, investment managers within the fixed income team, will take over the management of the fund when Mr Thompson leaves in June. The fixed income team at Baillie Gifford works with a strong team ethic and therefore OBSR do not believe this management change represents a change in investment approach. However, they are meeting with Baillie Gifford shortly and will reflect any change in their view thereafter.

The fund maintained a relatively defensive bias throughout 2009 and demonstrated less flexibility than OBSR would ordinarily expect. Considering this and comparing the fund to other rated funds in the sector, OBSR believe that an A Rating is a more appropriate reflection of their conviction in the fund.

Paul Read and Paul Causer, Co-Heads of Fixed Income, will hand the management of the fund to Michael Matthews and Stuart Edwards on 31 March 2010. Mr Matthews has been a member of the fixed interest team since 1995 and was appointed co-manager of the Invesco Sterling Bond fund, which is AA rated in the OBSR Global Fund Ratings Service, in 2006 before taking sole responsibility in June 2008. Mr Edwards joined the Invesco Perpetual Fixed Income team in January 2006 as a macro strategist and has since been involved in the management of the team's government and foreign exchange related funds. OBSR will continue to monitor the fund closely but as they are already familiar with Mr Matthews and know the team-based fixed income process well, they are happy to maintain an OBSR Fund Rating.

As of 12 February, all previously suspended transactions, (including new business, switches and surrenders), can resume.
If you have any questions then please contact your Prudential Account Manager.

The fund previously held an AA Rating. While OBSR have high regard for Alastair Mundy, who manages this fund with diligence, they have decided that an A Rating is a better reflection of its relative merits and their conviction in it going forward.

The fund previously held an AA Rating under the stewardship of Roger Guy and Guillaume Rambourg. Mr Bennett joined Gartmore in January 2010 from GAM where he previously ran the OBSR A Rated GAM Star Continental European Equity fund. OBSR have known Mr Bennett for many years and his investment approach is to select companies benefiting from broad sector themes and identify neglected stocks which he believes have the potential to surprise positively. Given the change of management, OBSR feel it is appropriate to adjust the Rating and look forward to continuing their quarterly dialogue with the new manager.

OBSR explain that the manager looks to understand the growth dynamics of a business, the potential for change and the extent of the undervaluation in the share price that will create value for shareholders.

OBSR explain that the team will analyse fundamental, quantitative and technical inputs across all markets. Fundamental analysis focuses on the macroeconomic outlook as well as on credit analysis. Credit analysis is based on bottom-up issuer-specific research provided by an extended and experienced credit team worldwide.

OBSR explain that the fund will be reasonably concentrated, typically comprising between 10 and 120 stocks. High yield is restricted to 20% of the fund's assets. As a global investment grade bond fund, the manager may invest in non-Sterling issues but a minimum of 80% of the portfolio will be hedged back to Sterling.

OBSR explain that the fund incorporates an underlying, diversified bond portfolio with overlay strategies through which they seek to enhance returns. The underlying bond portfolio may be invested in gilts, investment grade corporate bonds, high yield bonds and emerging market bonds (subject to fund guidelines).

OBSR explain that the manager's investment philosophy is based upon the belief that bottom-up research provides the most valuable framework around which to manage a high yield bond fund. The team aims to keep on a step ahead of market participants whose actions are driven by the decisions of the ratings agencies or by the need to match liabilities.

OBSR explain that the manager's investment process is founded on the belief that economic forecasts are frequently unreliable and therefore do not represent a sufficiently robust basis for portfolio construction. Instead, investment views are implemented through yield curve allocation (government versus credit bets), industry sector allocation, issuer credit analysis and security valuation.

OBSR explain that Threadneedle's fixed income team believes that successful investment management requires a flexible and multi-disciplined approach, recognising that sources of investment opportunity are not constant over time. The approach is therefore designed to be flexible whilst being framed by a robust process and risk control oversight.

OBSR explain that the manager's approach to stock selection is deeply contrarian, driven by the belief that cyclicality is a strong influence in virtually every sector of the market and that outperformance often follows underperformance.

OBSR explain that the manager believes that by combining rigorous and targeted financial analysis and research with embedded environmental, social and governance analysis, he is able to identify mispriced investment opportunities in companies that meet both the socially responsible objectives and the investment performance objectives of the trust.

OBSR explain that the manager believes that through a combination of thorough bottom-up research and a robust process for assessing the macro-economic environment, he is able to generate superior returns over a market cycle.

This fund had it's OBSR rating removed.

Although this fund is being removed from the PruSelect fund range at this time it is still available for existing and new customers.

This fund had it's OBSR rating removed.

Although this fund is being removed from the PruSelect fund range at this time it is still available for existing and new customers.

This fund had it's OBSR rating removed.

Although this fund is being removed from the PruSelect fund range at this time it is still available for existing and new customers.

This fund had it's OBSR rating removed.

Although this fund is being removed from the PruSelect fund range at this time it is still available for existing and new customers.

Following the announcement that Graham Birch is not returning to BlackRock from his sabbatical and that Evy Hambro will continue to assume sole responsibility for the management of the BlackTock Gold & General fund, OBSR have decided to keep the fund's AAA Rating unchanged. OBSR have known Mr Hambro for several years and have reviewed the fund with him a number of times since he took over last year. OBSR believe that he and the wider resources team have the credentials and experience to continue to deliver attractive returns to investors over the long term. OBSR will continue to monitor the team's progress as part of their regular quarterly reviews.