What sets our investment approach apart
M&G Treasury & Investment Office (T&IO's) performance is achieved through their development of a robust investment process, distinct from other providers.
We strongly believe that client outcomes will always be best served by:
- A long-term approach to investing, avoiding fads and trends.
- Diversification of asset classes and geography, reducing risk and volatility
- Active fund management, responding to market changes when they occur and ensuring portfolios don’t become imbalanced over time.
- Frequent and consistent asset valuation, identifying opportunities and optimising allocation.
Prudential's financial strength as part of M&G plc, provides T&IO with the ability to take advantage of the risk premiums to hold illiquid assets, accessing a wide range of asset classes and more accurately assess an investment’s future value over the long term.
An investment process shaped by five key activities
Strategic asset allocation (SAA)
The selection of the optimal SAA for funds has a critical impact on investment outcomes. This area:
- Is core to the investment approach
- Does the in-house modelling and capital market assumptions through our bespoke proprietary model GeneSIS - developed and maintained in house, giving us the flexibility to tailor it to wider business needs
- Is forward looking – diversification is key
- Has over £177bn AUM*
Tactical Asset Allocation (TAA)
TAA reflects shorter term views in portfolios. Run in parallel with SAA, it ensures Prudential funds are able to respond accurately to short-term market movements and take advantage of mispricing opportunities. This area has:
- Portfolio managers responsible within collectives**
- M&G macro team responsible for TAA in PruFunds***
- A framework in place across all multi asset portfolios
We believe daily monitoring is essential in ensuring a portfolio is managed and adjusted efficiently in line with target exposures, while simultaneously minimising cost and risk. We believe it is at the centre of all investment activity.
The Portfolio Management Team:
- Allocate investments in line with strategic asset allocation strategy
- Carry out daily portfolio monitoring
- Ensure all ongoing portfolio changes are implemented efficiently
We embed specialism at every stage of the investment process. Our specialist T&IO Manager Oversight team complements the skills of our fund managers, providing them with direction and insight into their fund’s underlying assets. This area has a:
- Robust selection/oversight process
- PruFund mandate design that can enhance returns
- Key source of market views from underlying managers
- Ability to seed new investment strategies
- Three lines of defence model
- Embedded at all stages of the investment process
- All portfolios formally stress tested quarterly
- Credit risk, market risk, liquidity risk, investment risk, regulatory risk and performance risk.
* T&IO Assets under management as at 30 December 2020. ** M&G Investment Management Ltd are the investment managers for the LF Prudential Risk Managed Active and Risk Managed Passive Funds. They make the relevant adjustments to the portfolios based on T&IO recommendations. *** The M&G Macro Investment Business runs the tactical asset allocation for the PruFund range of funds.