Top 5 Prudential Funds for Retirement Diversification

Prudential Financial Inc. (NYSE: PRU), a financial services leader with more than $1.5 trillion in assets under management (AUM) as of July 1, 2020, has been serving customers for over 135 years. Prudential Financial is known mainly for its insurance products but also has a large division that manages mutual funds and other investments.

Prudential Group Investment Management, or PGIM, offers over 75 funds with AUM of over $1.3 trillion.  Its fund selection covers a full range of equity, fixed-income and asset-allocation strategies. A combination of five funds provides excellent retirement savings diversification with a solid record of long-term returns. All financial information is based on the net asset value (NAV) of a fund's Class A shares.

Key Takeaways

  • Prudential Financial, known for its portfolio of insurance products, has also positioned itself as a global player in asset management with more than $1.4 trillion in AUM.
  • Many Prudential investments are held in retirement accounts such as 401(k) plans.
  • For retirement savers, the company has several mutual fund offerings that can help diversify portfolios to help generate steady returns over time. Here we consider 5 of them.

PGIM Jennison Growth Fund

The PGIM Jennison Growth Fund seeks to provide long-term capital appreciation primarily through investing in a diversified portfolio of high-growth U.S. equity securities. A typical company is a large cap with attractive fundamentals, above-average growth potential, and positive price momentum. Income from the portfolio is not an important consideration. The fund’s holdings include over 50 stocks in nine different sectors with an average capitalization of approximately $408 billion.  The Growth Fund has an annualized total return of 9.75% over five years and 12.10% over 10 years.

PGIM QMA Stock Index Fund 

The PGIM QMA Stock Index Fund is a passively managed fund that tracks the Standard & Poor’s (S&P) 500 Index of the largest U.S. companies. Rather than picking winners and losers, the fund invests in all the stocks of the 500 companies that make up the index according to their weighted value within the index. This investment approach creates a fund that has low expenses and provides investors with a high level of diversity plus solid returns. The Stock Index Fund has an annualized total return of 6.03% over five years and 9.90% over 10 years.

PGIM Jennison Equity Income Fund

The PGIM Jennison Equity Income Fund seeks investment income and long-term capital appreciation. The focus is primarily on high dividend-paying large-cap companies that may be undervalued and have the potential to sustain and increase dividends.  The fund also invests in real estate investment trusts (REITs) to boost cash flow. PGIM Jennison Equity Income Fund has an annualized total return of 2.56% over five years and 8.02% over 10 years, and has a current yield of 1.49%. 

PGIM Jennison Utility Fund

The PGIM Jennison Utility Fund focuses on current income and capital growth by investing in utility companies and firms that supply the utility sector. The stocks are primarily from gas and electric utilities, cable TV industries, and the telecommunications sector. These companies tend to pay reliable dividends. 

Demand for these services is continuing to expand, plus gas and electric utilities are benefiting from declining energy prices. Rates for natural gas and electricity are based on higher input price and do not go lower. All the savings received from declining raw material costs are profit, which allows for increasing dividends or stock buybacks. The Utility Fund has an annualized total return of 7.23% over five years and 11.75% over 10 years. The current yield is 1.95%.

PGIM Balanced Fund

The PGIM Balanced Fund seeks to provide high total return and steady cash flow while preserving capital. The fund accomplishes this objective by dynamically managing a combination of high-dividend stocks and fixed-income securities. It is invested in over 1,400 individual securities with a balance of roughly 60% stocks and 40% fixed income.

As protection against rising interest rates, PGIM Balanced Fund's fixed-income investments are primarily invested in government and high-grade corporate notes with short maturities. These assets can be rolled into new notes with higher payouts upon maturation. This protects investors against capital loss and steadily increases the fund’s yield. The Balanced Fund has an annualized total return of 5.87% over five years and 8.75% over 10 years. The current yield is 2.33%.

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