Information: For immediate release Tuesday 25 April 2000

CHANGES TO AUTIF's FUND SECTORS

• UK bond sector split into investment and non-investment grade sectors
• Ethical funds moved from specialist to mainstream sectors
• Smaller company sectors introduced for North America, Japan and Europe
• Six new sectors created – seven sectors abolished

The fund classification system, used to compare the performance of unit trusts and OEICs has been updated, with effect from 28 April 2000, following its regular review. Full details follow:

• Ethical funds will be reclassified within the mainstream sectors to allow performance comparison to be made against funds with similar geographical/asset mix characteristics. (It is likely that most funds will move to the UKAll Companies sector). A flagging system will continue to be used to identify ethical funds within these sectors.
• Small cap sectors will be created for North America, Japan and Europe. These funds currently occupy the regional specialist sectors which are to be abolished.
• A Specialist sector will be created to cover all funds with either a single country or a single sector investment theme.
• The UK General Bond sector will split to form two new sectors.
• The UK Corporate Bond sector will cover investment grade bond funds, which must invest at least 80% of their assets in Sterling-denominated (or hedged back to Sterling) triple BBB or above bonds and exclude convertibles.
• The UK Other Bond sector will comprise non-investment grade bond funds, which must invest at least 20% of their assets in below triple BBB rated bonds, convertibles and preference shares.
• The UK Gilt sector to have its definition tightened from a minimum 80% to a 90% gilt content
• The new sectors are; UK Corporate Bonds, UK Other Bonds, North American Smaller Companies, European Smaller Companies, Japanese Smaller Companies and Specialist.

Anne McMeehan, Director of Communications at AUTIF commented:

"These changes clear up a number of grey areas. Sector classifications exist, first and foremost, to help investors compare funds on a like for like basis. We wanted corporate bond fund holders to be better able to tell how their fund derives its performance and for ‘ethical’ investors to be able to compare their fund performance with more wide ranging growth funds."

The revised system will be implemented on 28 April 2000. Management companies are responsible for ensuring that their funds appear in the correct sector. They are also being encouraged to state in their six monthly Manager’s Reports the precise sector in which the portfolio appears.

For further information please contact:

Anne McMeehan, Director of Communications, AUTIF - Tel: +44 (0)20 7831 0898
Michael Quach, Head of Statistics, AUTIF - Tel: +44 (0)20 7831 0898
Clare Arber, PR Manager, AUTIF - Tel: +44 (0)20 7831 0898 

Notes to Editors:

1. Attached is a chart, showing the revised sector classification structure
2. The review was undertaken by AUTIF’s Performance Category Review Committee (PCRC). The Committee is made up of industry representatives and performance measurement providers
3. Sectors abolished are; UK General Bond, UK Specialist, North American Specialist, European Specialist, Japanese Specialist, Far East Specialist and Global Specialist.
4. Bond fund triple BBB ratings as measured by Standard & Poor or equivalent - Moodys Baa or above.
5. The total number of sectors has been reduced to 32 from 33.
6. Technology funds will be classified within the Specialist sector.  

AUTIF Fund Classification System (in PDF Format)