IMA CREATES PROPERTY SECTOR

Following consultation with members, the IMA and PCRC have created a new Property sector.  The sector will encompass all types of UK authorised funds investing in property, including direct property funds and property securities funds. The new sector will commence on 1 January 2009.  Monitoring will begin after the first quarter, allowing a grace period for setting up reporting systems and settling technical points that arise.  

IMA will flag certain fund styles, to permit investors and their advisers to identify certain sub-groups of funds.  Firms are permitted to self-elect flags.  Available flags are: Property Fund of Funds; Direct Property funds; Property Securities funds; and Hybrid Property funds.  Funds may cover any geographic region.

The new sector definition is as follows:

IMA Property sector

Funds which predominantly invest in property. In order to invest "predominantly" in property, funds should either:

• invest at least 60% of their assets directly in property; or
• invest at least 80% of their assets in property securities; or
• when their direct property holdings fall below the 60% threshold for a period of more than 6 months, invest sufficient of the balance of their assets in property securities to ensure that at least 80% of the fund is invested in property, whereupon it becomes a hybrid fund.

Notes:

1)     Funds falling into the first two categories will be flagged as "Direct Property funds" and "Property Securities funds" respectively.

2)     If a fund has a minimum of 80% in property (direct and securities), but does not exceed the 60% direct property threshold, then it is a "Hybrid Property fund".

3)     Property securities are admissible assets within the investment limits indicated if included in an appropriate, independently constructed index.

4)     Property securities held within the 80% limit are intended to be equities.

5)     IMA expect that member firms will follow good practice guidelines when using techniques to value property assets.

6)     Newly launched property funds which are intending to invest directly in physical property will be permitted a period of 12 months to come into compliance with the sector definition. The funds will be asked to make an appropriate commitment at the outset to the IMA.

-ENDS-

Notes to Editor:

1. As at September 2008, IMA's sector classification system included 35 identified property funds within the Specialist sector, representing £10.1 billion under management.
2. The IMA is the trade body for the UK's £3,100 billion asset management industry.  The money its members manage is in a wide variety of investment vehicles including authorised investment funds, pension funds and stocks and shares ISAs.  Its role is to represent the industry and promote high standards
3. The PCRC is the IMA Performance Category Review Committee, a committee with the remit to oversee the integrity of the IMA sectors.  Committee members are drawn from IMA member firms, data vendors and the sector monitoring company, Lipper, as well as IMA staff.

For further information, please contact:
Noreen Shah, Press Officer, IMA, 0207 831 0898
Mona Patel, Head of Communications, IMA, 07834 089332