Prudential just launched what appears to be an absolute return fund. Today Pru revealed the Prudential Jennison Market Neutral Fund.
"Investors should view the fund as an opportunity to reduce the impact of market movements on their portfolios, gain potential downside protection in turbulent markets and enhance their diversification," stated Judy Rice, president of Prudential Investments.
Jennison Associates' Sig Segalas, David Kiefer and John Mullman manage the long portion of the portfolio, while Mehdia Mahmud and Jason McManus manage the short portion.
Class A shares of the new fund boast a 550 basis point initial load and 100 bps deferred load, along with a net expense ratio of 318 bps. B shares cost 500 bps in deferred load and 393 bps in net expense ratio. C shares cost 100 bps in deferred load and 393 bps in net expense ratio. And Z shares cost 293 bps in net expense ratio.
Pru handles distribution of the fund and is the transfer agent.
Company Press Release
NEWARK, N.J., Apr 27, 2010 -- Prudential Investments today announced the launch of the Prudential Jennison Market Neutral Fund (Ticker: PJNAX). Managed by Jennison Associates, the fund seeks consistent returns in both up and down markets. Prudential Investments is the mutual fund family of Prudential Financial Inc. (PRU 62.65, -2.84, -4.34%) .
"Our market neutral strategy seeks to provide investors with the long-term capital appreciation they need to address their goals, but with less volatility than is typically found in the equity market. It offers the potential for protection from market declines while providing the long-term growth potential of stocks," said Judy Rice, president of Prudential Investments. "This approach may reduce portfolio volatility and could help investors avoid the temptation to respond emotionally to major market shifts."
The fund's market neutral approach combines long and short strategies, holding long positions in stocks the managers expect to outperform the market and shorting stocks they expect to underperform. The long portfolio combines growth, value, small and mid-cap equity investments using Jennison's fundamental, research-driven approach, which is expected to drive most of the fund's excess returns. The short portfolio is constructed using a quantitiative process and is intended to provide an effective hedge against the long portfolio while adding a modest amount of excess return.
"Investors should view the fund as an opportunity to reduce the impact of market movements on their portfolios, gain potential downside protection in turbulent markets, and enhance their diversification," Rice added.
The fund is managed by portfolio managers from Jennison Associates. The long portfolio is managed by:
-- Spiros "Sig" Segalas, a founding member of Jennison in 1969 who is currently director, president and chief investment officer of the firm, leading management of the fund's growth strategy.
-- David A. Kiefer, a managing director and head of Jennison's large cap value equity team, leading management of the fund's value strategy.
-- John P. Mullman, managing director and portfolio manager of Jennison's small and mid-cap portfolios.
The fund's short portfolio is managed by:
-- Mehdi Mahmud, Jennison's chief operating officer, and who is responsible for overseeing the quantitative portion of the fund.
-- Jason McManus, a vice president and a member of Jennison's quantitative research team.
Mahmud and McManus are also responsible for the risk management and capital allocation decisions relating to the aggregate portfolio.
Jennison Associates is one of the nation's leading active equity managers with expertise in growth, value, and blend investing styles. Established in 1969, Jennison combines the experience and judgment of its portfolio managers and research analysts with disciplined investment processes.
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 on Prudential Investments and the Prudential Jennison Market Neutral Fund.
Prudential Financial, Inc. (PRU 62.65, -2.84, -4.34%) , a financial services leader with approximately $667 billion of assets under management as of December 31, 2009, has operations in the United States, Asia, Europe, and Latin America. Leveraging its heritage of life insurance and asset management expertise, Prudential is focused on helping individual and institutional customers grow and protect their wealth. In the U.S., the company's Rock symbol is an icon of strength, stability, expertise and innovation that has stood the test of time. Prudential's businesses offer a variety of products and services, including life insurance, annuities, retirement-related services, mutual funds, investment management, and real estate services. For more information, please visit http:/www.news.prudential.com.
The Fund seeks long-term capital appreciation by employing a "market neutral" strategy. Utilizing both long and short equity positions, the Fund seeks to preserve capital during declining U.S. equity markets, minimize portfolio volatility, minimize net exposure to equity markets, and exhibit low correlation to broad market indices.
Long positions are selected using a multi-strategy approach, typically growth, value, and small- and mid- capitalization, which is expected to provide diversification. Short positions are derived using a quantitative methodology applied to a broad universe of equity securities. In this way, the Fund is expected to be both diversified across multiple underlying strategies as well as market neutral (i.e., it is anticipated that the Fund's return should not be significantly affected by broad equity market price movements). In pursuing its market neutral strategy, the Fund seeks a total return greater than the return on three-month U.S. Treasury bills. Unlike other investment vehicles, U.S. government securities and U.S. Treasury bills are backed by the full faith and credit of the U.S. government, are less volatile than equity investments, and provide a guaranteed return of principal at maturity.
In addition to the inherent risks of investing in the stock market, the Fund is subject to additional risks associated with short selling, leverage, and derivatives. Selling short is a form of leverage. Because the Fund borrows a security to establish a short position, there is a risk that the Fund will be unable to replace the borrowed security by purchasing it at a particular time or at an acceptable price, preventing the Fund from implementing its investment strategy. In addition, the Fund may be obligated to cover its short position at a higher price than the short price, resulting in a loss. Losses on short sales are potentially unlimited, because the Fund's loss on a short sale arises from the increase in value of the security sold short. Leverage may exaggerate the effect of any increase or decrease in the value of the Fund's holdings, and make any change in the Fund's net asset value (NAV) greater than it would be without the use of leverage. The Fund may invest in derivative securities, which may carry market, credit, and liquidity risks.
The Fund may invest in small- and mid-cap stocks, which may be subject to more erratic market movements than large-cap stocks. The Fund may invest in foreign securities, which are subject to the risks of currency fluctuation and political uncertainty. These risks may result in greater share price volatility. There is no assurance the Fund's objective will be achieved. Investment strategies such as diversification do not assure profit and cannot protect against losses in a falling market.
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, a Prudential Financial company. Prudential Investments, Prudential Financial, the Rock Prudential logo, Jennison Associates, and Jennison are registered service marks of The Prudential Insurance Company of America, Newark, NJ, and its affiliates.