Can anyone explain how this fund might work?

[BigNick]

A year or so ago, my bank discontinued a mostly-stocks-based fund that I held, and I had 100K (Euros) to reinvest. I was looking to rebalance a bit, so I asked the adviser for something solid. He recommended this fund.

The performances seem remarkable. There was a 3% entry fee (ouch) but I got that back within about 7 months. I check the value every week and there have only been two weeks in the last year when it didn't go up a little bit. It looks like a 4% SWR in a single fund. But I'd love to know how they're doing it.

 

[VanWinkle]

Interactive Factsheet - PIA PruFund Growth Fund EUR Ser B

Appears to be a balance fund investing in mostly International equities and fixed income from the US and International. Somewhat expensive at 1.41 ER.
I don't see any magic in the results.

 

[RunningBum]

Why don't you have your advisor explain it to you?

The performance consistently lags the S&P 500 so I wouldn't call it "remarkable".

Go to https://www.prudential-international.com/fr-en-adviser/why_ipb/funds/prufund/ and read the guide to investing, the guarantee option, and your specific fund report. Ideally you would've done this before investing. They hold back some gains in good time and use them in bad times to prop up the price. And they sometimes do "price adjustments", which I don't understand. I don't see how this would be sustainable in a longer down market.

 

[pb4uski]

... The performance consistently lags the S&P 500 so I wouldn't call it "remarkable". ...

To be fair, you would need to compare the perfmance to a 75/25 investment since the fund's AA is ~75/25.... also, the equities used for comparison should be European equities rather than US equities since it is a European product.

Finally, ERs outside the US generally tend to be higher.

 

[target2019]

A year or so ago, my bank discontinued a mostly-stocks-based fund that I held, and I had 100K (Euros) to reinvest. I was looking to rebalance a bit, so I asked the adviser for something solid. He recommended this fund.

The performances seem remarkable. There was a 3% entry fee (ouch) but I got that back within about 7 months. I check the value every week and there have only been two weeks in the last year when it didn't go up a little bit. It looks like a 4% SWR in a single fund. But I'd love to know how they're doing it.

It's not remarkable, IMO. Banks recommend what gets them an up-front fee (check), and continuing high fees (check).
It is diversified.
European Equities 16.30%
Property 14.80%
Euro Fixed Interest 12.50%
US Fixed Interest 12.30%
Other Investment Assets 9.40%
Pacific Market Equities 7.60%
UK Equities 7.10%
North American Equities 6.70%
Asia Fixed Interest 4.40%
Japanese Equities 3.20%
Global Emerging Markets Equities 3.20%
Cash 1.70%
Other Fixed Interest 0.80%

Some combination of Vanguard ETFs would provide more. As pointed out, S&P500 would give more, but the risk would be higher.

I'm shocked that a bank adviser would present complexity to you. Not!

 

[OldShooter]

The way the fund works is that it makes money for the seller. The complexity serves to mask that from the buyer.

 

[BigNick]

Bumping this thread to say that I learned a bit more about this fund during recent events. For the first three weeks after the big late-February downturn it was displaying its usual steady progress, but then overnight it took an 18% drop, now back up to only 14%. I guess their ability to hedge against bad times wasn't unlimited.

 

[mrfeh]

Bumping this thread to say that I learned a bit more about this fund during recent events. For the first three weeks after the big late-February downturn it was displaying its usual steady progress, but then overnight it took an 18% drop, now back up to only 14%. I guess their ability to hedge against bad times wasn't unlimited.

Please read this: https://www.bogleheads.org/wiki/Bogleheads®_investing_start-up_kit

 

[BigNick]

Please read this: https://www.bogleheads.org/wiki/Bogleheads®_investing_start-up_kit

Thanks. I like to think I've been a reasonably savvy investor up to now, but for some reason I dropped the ball on this one. Age-related cognitive decline, probably. Also a lack of willingness to question the bank's suggestions. Lessons learned!