Pru Life UK going into fund management

British insurer Pru Life UK is all set to debut into the fund management business by the end of October with the launch of a new trust unit that will initially offer feeder funds in partnership with affiliate global asset manager Eastspring Investments.

The Philippine unit of British insurance giant Prudential plc, which holds a license to create a new stand-alone trust corporation called Pru Life UK Asset Management and Trust Corp. (PAMTC), has likewise obtained approvals to launch new products.

PAMTC will offer mostly unit investment trust funds, which pool investments from investors with the same objective and risk appetite. This is similar to a mutual fund except that there is no need to create a new corporation every time a new fund is launched.

The new fund management firm has teamed up with Eastspring Investments, also part of the Prudential group, for its inaugural offering, Pru Life UK president and CEO Antonio de Rosas said in an interview with the Inquirer last week on the sidelines of the signing of an agreement with St. Luke’s Medical Center to streamline the processing of insurance claims for critical illnesses.

Founded in 1994, Eastspring manages some $216 billion worth of assets across equity, fixed income, multi-asset, quantitative and alternative strategies on behalf of institutional and individual investors globally.

“The first fund we’ll launch will be feeder funds. These are funds already existing in Eastspring,” De Rosas said.

A feeder fund puts all investment capital into an overarching umbrella fund that is called the master fund, for which one investment adviser handles all portfolio investments and trading.

Feeder funds will be offered especially for those with appetite for offshore investing, De Rosas said.

In the future, he said PAMTC would also offer equity-laced funds.

“We’ll build it (asset management business) from scratch,” he said.

By venturing into this new business, De Rosas said Pru Life UK would be able to complement its existing protection business in the Philippines and bring in clients who prefer pure investment products.

“We had clients approaching us wanting to invest in mutual funds. We’d say we don’t have mutual funds but we have single-premium [protection] products. But these are clients who like purely investment instruments, so we lose these clients to competitors.”

Trust corporations are duly authorized by the Bangko Sentral ng Pilipinas to engage in funds management under either a trustor-trustee arrangement or an agency type of agreement. Unlike existing trust units of banks and nonbank financial institutions, however, these entities are organized as a corporation with their own capital and management structure.

Trust corporations are required to have a minimum capital of P100 million at inception, and to increase this to P300 million over a five-year period.