Thursday, January 13, 2011
Prudential Unveils a Real Assets Fund
Reported by Hung Tran
today launched the Prudential Real Assets Fund, which bets on physical properties, such as real estate, metals, fuel, and other commodities, aiming to provide protection against inflation and rising interest rates.
The fund’s asset allocation strategy is led by Quantitative Management Associates
, which manages nearly $40 billion in asset allocation strategies, including real assets.
Prudential Investments Launches Real Assets Mutual Fund
NEWARK, N.J.--(BUSINESS WIRE)--Prudential Investments today announced the launch of the Prudential Real Assets Fund, a mutual fund that potentially offers investors greater diversification and improved risk-adjusted returns. Focused on investments with physical properties, such as real estate, metals, fuel, and other commodities, the fund also provides potential protection against inflation and rising interest rates. Prudential Investments is the mutual fund family of Prudential Financial Inc. (NYSE: PRU)
“Along with providing a potential hedge against rising interest rates and inflation, this fund helps improve portfolio diversification since the performance of real assets is not tied to traditional stock and bond investments.”
.Investing in real assets may also help prove beneficial if the rising U.S. deficit, coupled with reduced tax revenue, puts upward pressure on interest rates and inflation. According to industry data, real assets have traditionally outperformed stocks and bonds during periods of rising interest rates. According to data from Ibbotson Associates, when the Federal Reserve raised interest rates from 1.00 percent to 5.25 percent between June 2004 and June 2006, real assets post-inflation returns produced average annual real returns of 9.35 percent, versus 4.56 percent for stocks or the 0.34 percent loss for bonds.
“This fund offers investors the potential to lower their overall risk while enhancing the potential for better returns,” said Judy Rice, president of Prudential Investments. “Along with providing a potential hedge against rising interest rates and inflation, this fund helps improve portfolio diversification since the performance of real assets is not tied to traditional stock and bond investments.”
The fund’s dynamic asset allocation strategy is led by Quantitative Management Associates, which manages nearly $40 billion in asset allocation strategies, including real assets.
The fund seeks long-term real returns by tactically allocating between the following asset classes, managed by Prudential’s institutional asset managers:
•Commodities, managed by Prudential Bache Asset Management, invests in energy, metals, and agricultural commodities. Prudential Bache has been a global leader in futures and commodities broking for over 130 years.
•Utilities, infrastructure, and natural resources, through investments in the Prudential Jennison Utility Fund and the Prudential Jennison Natural Resources Fund. Both are managed by Jennison Associates, one of the industry’s leading active equity managers.
•Domestic and international REITs, through investments in two new Prudential funds, the Prudential U.S. Real Estate Fund and the Prudential International Real Estate Fund, managed by Prudential Real Estate Investors, the real estate investment management and advisory business of Prudential Financial and a global real estate investor with presence in 14 countries and deep expertise in private and public real estate markets.
•Treasury Inflation Protected Securities, managed by Prudential Fixed Income, one of the nation’s largest fixed income managers.
•Gold-related securities and other defensive investments managed by Quantitative Management Associates’ asset allocation team.
Prudential Investments offers mutual funds across a range of asset classes and sectors, including equity, fixed income, real estate and specialty securities. Please visit http://www.prudentialfunds.com for more information.
Prudential Financial, Inc. (NYSE: PRU), a financial services leader with approximately $750 billion of assets under management as of September 30, 2010, has operations in the United States, Asia, Europe, and Latin America. Prudential’s diverse and talented employees are committed to helping individual and institutional customers grow and protect their wealth through a variety of products and services, including life insurance, annuities, retirement-related services, mutual funds, investment management, and real estate services. In the U.S., Prudential’s iconic Rock symbol has stood for strength, stability, expertise and innovation for more than a century. For more information, please visit http://www.news.prudential.com/
The Fund is exposed to the same types of risks as the underlying funds, securities, and financial instruments in which it invests. These risks include: during periods of deflation or no inflation, the Fund may underperform broad market measures and lose value; non-U.S. issuer securities, including emerging markets, may not be as stable as those in the U.S.; non-U.S. issuer securities may also be less liquid than U.S. stocks and bonds, and investments in emerging market securities are subject to greater volatility and price declines; real estate poses risks related to overall and specific economic conditions as well as risks related to investing in equity-related securities of real estate companies, principally real estate investment trusts, operating in the U.S., outside the U.S., and in emerging markets, and credit and interest rate fluctuations; commodities may be speculative and more volatile than investments in more traditional equity and debt securities; commodity-linked notes may be subject to counterparty risk, volatility risk, and leverage; the Fund may invest in a wholly owned Cayman Subsidiary, and changes in the laws of the Cayman Islands could result in the inability of the Fund to effect its desired commodity investment strategy; derivative securities may carry market, credit, counterparty, leverage, and liquidity risks; Treasury inflation-protected securities are inflation-index bonds that may experience greater losses than other fixed income securities with similar durations; fixed income investments are subject to interest rate risk, credit risk, and illiquidity risk; the guarantee of U.S. government securities applies only to the investments in the Fund’s portfolio and not to the value of the Fund’s shares; the Fund’s manager also serves as the manager of the underlying funds, and a conflict of interest could affect how the manager and subadvisers fulfill their fiduciary duties to the Fund and the underlying funds; short sales, which involve costs and risk of potentially unlimited losses, and leveraging, which may magnify losses; and nondiversified, which means the Fund may invest in a smaller number of issues than a diversified fund, and this increases its vulnerability to any single economic, political, or regulatory developments, which will have a greater impact on the Fund’s return. These risks may result in greater share price volatility.
The risks associated with the Fund are more fully explained in the prospectus. There is no assurance the Fund’s objective will be achieved. Asset allocation and diversification do not assure a profit or protect against loss in declining markets.
Consider a Fund's investment objectives, risks, charges, and expenses carefully before investing. The prospectus contains this and other information about the Fund. Contact your financial professional for a prospectus and read it carefully before investing.
Mutual funds are distributed by Prudential Investment Management Services LLC, member SIPC. Quantitative Management Associates, LLC (QMA) is a wholly owned subsidiary of Prudential Investment Management, Inc. (PIM). Prudential Fixed Income and PREI®, also known as Prudential Real Estate Investors, are units of PIM. Jennison Associates, QMA, PIM, and Prudential Bache Asset Management are registered investment advisors. All are Prudential Financial companies. Prudential Investments, Prudential, Jennison Associates, Jennison, the Prudential logo, and the Rock symbol are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide.a Prudential Financial company.
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