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Pru sees record M&G inflows; warns over RDR impact on bond sales

by William Robins on Nov 14, 2012 at 09:05

Pru sees record M&G inflows; warns over RDR impact on bond sales

Prudential has been boosted by a huge asset haul led by fund group M&G, which helped the insurer secure record inflows of £12.3 billion in the third quarter of 2012, a rise of 263%, as investors returned from period of ‘extreme risk aversion'.

Over the third quarter of 2012 overall asset management inflows at Prudential, due largely to M&G, rose hugely, hitting £12.3 billion up from £3.4 billion in the third quarter of 2011.

M&G recorded inflows of £6.4 billion compared to £300 million in 2011, a rise of 329%.

Pru said retail investors had returned to the market after a period of ‘extreme risk aversion.’

Tidjane Thiam (pictured), Pru chief executive, said: ‘This is our best ever performance at the nine month stage surpassing the historically high level of net inflows achieved in 2009.

‘M&G has benefited from its strong investment performance and broad range of attractive funds across asset classes as retail investors, particularly those in continental Europe, are starting to invest again after a period of extreme risk aversion observed in 2011.’

Pru’s UK business rose 17% compared to the third quarter of 2011 from £194 million to £227 million.

Pru said it expected investment bond sales, in particular, to be impacted by the impending retail distribution review with a slowdown showing in the last stages of 2012.

It said individual annuity sales were up 25% to £166 million. Sales to customers who did not already have a pension with the Pru were up 41% to £62 million reflecting, it said, the popularity of its with-profits Income Choice Annuity product.

However corporate pensions sales fell 22% to £148 million despite the introduction in October of auto-enrolment. Pru said it was not focused on establishing new schemes but was focusing on increasing membership within existing schemes.

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2 comments so far. Why not have your say?

Richard Wakem

Nov 14, 2012 at 15:44

Well if bonds were being advised for the correct reasons there should be not change ? or have i missed something

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Nov 19, 2012 at 14:50

I totally agree, if you put aside the bond commission hype, there are still many valid reasons why an investment bond would be recommended as the right tax wrapper for a client, such as:

- IHT/estate planning, as bonds can be held much easier in trust than collectives, not to mention benefits of Discounted Gift Trusts

- non-income producing, which shelters income-producing funds, which can help to reduce total income below tax 'trap' thresholds for age/personal allowance purposes and of course the new high income child benefit charge! Can also benefit Trustees of trusts

- 5% tax deferred withdrawals (assuming of course fees are charged, as adviser charges will reduce the 5%)

- Encashment strategies, including top-slicing relief, time apportionment relief, assigment of segments/whole bond etc

- No further taxation, until a chargeable event takes place for an offshore bond and credit for BRT inside an onshore bond

- Control and flexibility of when a chargeable takes place

and so on.......

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