Prudential Fund Management

“In the UK we have this year grouped together our investment-led business to accelerate growth.” Derek Higgs, Chairman, PPM.

Prudential’s fund management activities in the UK have been brought together under the chairmanship of Derek Higgs and a single management team. They comprise the corporate pensions business, collective investments including PEPs and unit trusts, and the fund management services of Prudential Portfolio Managers (PPM).

Operating profit for Prudential Fund Management totalled £50 million in 1998, in line with the previous year. Funds managed by PPM rose to £128 billion in 1998, up from £119 billion at the start of the year.

The Corporate Pensions business provides packaged investment and administration services to large employers. This business has some 3,500 clients, covering over 350,000 individuals with assets of around £4 billion. In the last year we have launched progressive initiatives with industry-wide groups to tackle issues raised by the government’s stakeholder pension proposals.

Prudential Portfolio Managers manages funds worldwide for the Group. Its operations are based in four regional centres and seven investment offices worldwide, with centres being linked by a global investment network, ensuring consistent application of investment skill.

PPM Operating Profit (£m)		Funds Under Management (£bn)

Investment Performance
Stretched valuations in major equity markets and the concentration of performance in only a small number of companies and sectors created difficult investment conditions for many active fund managers. PPM’s research-intensive approach which concentrates on identifying companies with unrealised value, was not rewarded overall in 1998 although the areas of under-performance were limited by the risk controls we have in place. Whilst a number of key funds have under-performed in 1998, the main £54 billion with-profits life fund continues to exceed competitors’ performance over three and five year periods.

The BBC scheme for its freelancers has been widely praised as a pensions model which meets the needs of the modern workforce. The scheme extends the fund manager choices to their employees, makes charges clearer and improves communication and information employees need as they move jobs within the broadcasting industry.

In Japan and the Far East, where funds managed by PPM won the 1998 best performance award from S&P/Micropal, our approach to investment proved successful. Our long-term approach and commitment to investment research was also recognised by the finance directors of the UK’s top 350 companies who voted PPM Best Fund Manager in the 1998 Extel Survey of Investment Analysts.

In the area of new business, PPM had another successful year, winning over 50 new investment mandates with funds under management in excess of £1 billion. We continued to build our business, setting up an office in Tokyo, as well as strengthening our equity and bond investment teams.

As part of our investment portfolio, we manage properties valued at £8.2 billion, including numerous shopping centres, flagship office buildings, retail parks and industrial centres. Once again the property portfolio performed well in 1998, at least matching its competitors in this sector.

For more information, please visit Prudential Portfolio Managers’ website: www.ppmworldwide.com