A simplified guide to Prudential s With-Profits Fund. Balanced risk and the potential for growth

Transcription

1 A simplified guide to Prudential s With-Profits Fund Balanced risk and the potential for growth

2 About this guide This is a highly simplified description of our With-Profits Fund (the Fund ) and our With-Profits plans and how they work. Please read it together with our specific terms and conditions and the other information we offer, including our product brochures. Prudential Hong Kong Limited ( Prudential ) has discretion in how the Fund is managed and invested as well as how (and if) bonuses are declared. Our aim is to manage the Fund in an effective and prudent way. 2

3 How our With-Profits Fund works Prudential s With-Profits Fund aims to provide long-term and stable returns in different market conditions. To do this, it invests in a wide range of assets, such as equities, property, bonds and cash. This diversification means it is not fully exposed to one particular asset class or market so its returns (profits and losses) are likely to be more balanced over the longer term. We provide a range of With-Profits insurance plans with different levels of protection and savings. We invest your premiums into the Fund along with other With-Profits policyholders. Risk/reward level of our With-Profits Plans High Direct Investment in Stock Markets Equity Funds Emerging Market Funds Reward With-Profits Plans Low Corporate Bonds Government Bonds Bank Deposits Risk High Note: The diagram is only intended to be a general indicator of relative risk and reward, and may vary in certain circumstances. Because our plans have different features and risk profiles, we divide the Fund into several sub-funds. For example, our USD With-Profits Fund and HKD With-Profits Fund support our USD-denominated and HKD-denominated policies respectively. Our With-Profits plans may also vary in investment strategy and so have different levels of investment return. We distribute the profits of the Fund available among our With-Profits policyholders and shareholders; this is the distributable profit. Your plan shares in the distributable profits of the Fund allocated to it through a regular bonus and/or a one-off final bonus. 3

4 Key benefits Potential growth through bonuses We share the Fund s distributable profits with you through bonuses. Different With-Profits plans may have different bonus structures and/or investment strategies, so your share of profits depends on the underlying Fund s investment performance that we can allocate to your individual plan. You can find the declared bonus rates in your anniversary statement. We give back 90% of distributable profits We believe in being fair, objective and transparent. We divide the Fund s profits between our With-Profits policyholders and shareholders no less than 90% of the distributable profit from our With-Profits Fund will be allocated to With-Profits policyholders. The calculation of the distributable profit of With-Profits Fund is performed separately and is not the same as that of the total profits of Prudential Hong Kong Limited. We ring-fence the With-Profits Fund from our other funds so your benefits are safeguarded and so that only With-Profits policyholders benefit from it. Smoothing investment volatility The Fund holds back some of its investment returns in good years to support years in which returns are lower. This smoothing effect means you are less affected by the peaks and troughs of the market. A substantial capital for flexibility and security We have built up a substantial amount of ring-fenced capital (our Inherited Estate) which is expected to grow over the years. This capital strength allows you to benefit from the guarantees in our With-Profits plans and gives us greater flexibility to invest in a wider range of assets. 4

5 Your investment manager Eastspring Investments ( Eastspring ) is the Asian Asset Management business of Prudential plc and manages most 1 of our With-Profits Fund. Eastspring is one of the leading asset managers in Asia with USD 170 billion (as at 30 June 2017) assets under management and a presence in 10 Asian markets. Asia Fund House of the Year 2016 AsianInvestor Asset Management Awards Top Investment House in Asian local currency bonds The Asset Best Asset Management House Asian Asset Management Active management for long-term, stable growth potential Figure 1 shows how Eastspring actively manages the USD With-Profits Fund under different market conditions. For example, during the 2008 financial crisis, Eastspring reduced its exposure to risky assets, such as equities, instead increasing its holding of less risky assets, such as bonds. As the economy recovered, Eastspring bought equities again to give policyholders the potential for greater return. Figure 1: The USD With-Profits Fund s 2 investment mix through economic cycles 100% 80% 60% Equities Corporate bonds Government bonds Property Others 40% 20% 0% 2007 Before financial crisis 2008 Global financial crisis 2011 Eurozone debt crisis 2013 Economic recovery 2015 Volatile market Source of data: Eastspring Investments 1 A small portion of the fund is managed by BOCI-Prudential Asset Management Limited. 2 The graph shows our major USD sub-fund and is indicative only. 5

6 Prudential s With-Profits Fund portfolio Our With-Profits plans may have different investment mixes because their investment strategies vary. Besides, the actual exposure is also actively managed and adjusted in response to changing market conditions. Here is the investment mix of our With-Profits Fund (as at 31 December 2017). Table 1: The Fund s asset mix As at 31 December 2017 Asset mix USD Fund HKD Fund Fixed-income type Government bond 44% 13% Investment-grade bond 9% 48% High-yield bond and emerging-market bond 9% 1% Other debt 0% 0% Equity type Common stock 31% 38% Property 4% 0% Other equities* 3% 0% Total 100% 100% * Other equities mainly comprises alternative investments like private equities. Table 2: The Fund s currency mix As at 31 December 2017 Currency mix USD Fund HKD Fund United States Dollar 75% 15% Hong Kong Dollar 6% 67% Euro 5% 5% Japanese Yen 3% 4% Others # 11% 9% Total 100% 100% # Others mainly comprises British Pound Sterling (GBP), Australian Dollar (AUD) and currencies from major Asia countries. Table 3: The Fund s geographic mix As at 31 December 2017 Geographical mix USD Fund HKD Fund USA 63% 17% Asia Pacific (excl. Japan) 17% 71% Europe 9% 6% Japan 3% 3% Others ^ 8% 3% Total 100% 100% ^ Others mainly comprises Canada, Latin America and Middle East & Africa. Source of data: Eastspring Investments 6

7 Need more details? Get in touch Please refer to our With-Profits Plan brochure available at for information (such as investment philosophy and bonus philosophy) on your With-Profits Plan and the operation of a With-Profits Fund. Please contact your financial consultant or call our Customer Service Hotline at for more details. Notes These details are for reference only. They do not represent a contract between Prudential Hong Kong Limited ( Prudential ) and anyone else. If you would like more details about any of the plans mentioned, please ask Prudential for a sample of the policy document. This simplified guide is for Hong Kong distribution only. It is not an offer to sell or solicitation to buy or provide any insurance product outside Hong Kong. Prudential does not offer or sell any insurance product in any jurisdictions outside Hong Kong where such offering or sale of the insurance product is illegal under the laws of such jurisdictions. 7

8 Prudential Hong Kong Limited (A member of Prudential plc group) 8/F, Prudential Tower The Gateway, Harbour City, 21 Canton Road Tsim Sha Tsui, Kowloon, Hong Kong Customer Service Hotline: Corporate Website MKTX/QB0266E (03/18)