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Prudential broadens Dynamic Portfolios’ holdings

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Matthew Williams from Prudential’s Portfolio Management Group (PMG) has broadened the sizes of companies held in the Dynamic Portfolios’ underlying funds, as part of an effort to move down the market capitalisation spectrum in its UK equity holdings.



The series of trades across the five risk-rated portfolios add new funds including the GBP4.3bn Artemis Income fund run by Adrian Frost and Adrian Gosden, Threadneedle’s GBP1.1bn UK fund run by Simon Brazier, and Axa Framlington’s GBP3.2bn UK Select Opportunities fund run by Nigel Thomas.
 
Prudential’s five Dynamic Portfolios have divested from the GBP453m BlackRock UK fund run by Nick Little, David Docherty’s GBP375.2m Cazenove UK Growth & Income fund and Richard Buxton’s GBP2.8bn Schroder UK Alpha Plus fund. The GBP7.7bn M&G Recovery fund, run by Tom Dobell, will remain in the portfolios at a slightly reduced weight in balance with the incoming funds.

The Dynamic Portfolios target risk by combining the active asset allocation of Prudential’s PMG with tailored baskets of third party funds reviewed and recommended by Morningstar OBSR. These latest changes have been recommended by Morningstar OBSR to ensure the blended style achieved within UK Equity remains appropriate to the objectives of the portfolios.
 
Williams says: “We’re constantly reviewing the underlying construction of our Dynamic Portfolios and it’s important to emphasise that these changes are in no way a judgement on the funds we are selling. The wheels for the latest changes were set in motion when BlackRock’s UK fund increased their large cap weightings.
 
“We’ve made sure we have moved down the market cap spectrum as we started off with a large cap bias and that got bigger with the changes in the BlackRock fund. If large caps have performed well for a year then the stochastic models that some firms use will automatically recommend them. The qualitative approach that we and OBSR bring to fund research avoids that trap.”
 
Prudential’s PMG bases its fund selection decisions on advice from research agency Morningstar OBSR. It recommends a series of suitable managers depending on the Prudential multi-managers’ desired asset allocation.
 
The Prudential group has over 500 investment professionals around the world, managing in excess of GBP350bn on behalf of policyholders and clients as at end of December 2011.

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