IMA
MEMBERS TO
COMMENT ON
POSSIBLE
SECTOR CHANGES
The Investment Management Association
(the IMA) has asked its members to comment on proposals
for changes to the fund sectors.
The IMA’s Performance Category
Review Committee (PCRC) has conducted a review of the
performance sector classifications.
It believes that a new sector should be considered
when there are 10-20 funds of a sufficiently distinct
character to comprise a separate sector.
Conversely, when a sector falls below 10 funds
abolition will be considered.
Proposed Changes and Amendments:
1.
Global Equity & Bond – sector to be
abolished.
This
sector contains fewer than 10 funds, and there is some
overlap with the ‘managed’ sectors. All funds can
easily be reclassified into a suitable alternative IMA
sector.
2.
Global Equity Income – sector to be abolished
This
sector contains fewer than 10 funds.
The sector definition requires funds to have a
yield ‘in excess of 110% of the FT World Index’.
The majority of funds do not meet this requirement,
and in most cases the funds’ yields are similar to funds
in the Global Growth sector. The sector is not
sufficiently unique to continue, and the PCRC proposes to
reclassify the majority of funds into the Global Growth
sector.
3.
UK Gilt sector – split into Conventional and
Index Linked
The two
types of Gilt funds show markedly different return
profiles over time. Differences
in returns are larger between index-linked and
conventional gilts than between corporate bonds and
government bonds, which comprise separate sectors.
Accordingly, the PCRC is of the opinion that index
linked gilts represent a distinct asset class and it would
therefore be more instructive to investors if the funds
were shown in a separate sector.
(Current estimate is 14 indexed gilt funds )
Members
have been asked to respond by 19 April in order for the
proposals to be implemented on 1 May.
Managers of funds that will be affected by these
changes will be contacted to determine their correct
classification.
