| home | investors | market statistics | news & views | members | about IMA | contact |
Sector Definitions and Classification
There are 2000 investment funds to choose from. But to help you identify funds with similar characteristics, they are categorised within a fund classification system of over thirty sectors. The sector categories are broadly divided into funds that aim to provide an ‘income’ and those designed to provide ‘growth’. Each sector is made up of funds investing in similar assets, or the same stockmarket sectors, or in the same geographical region.
Funds are classified in this way to make it easier for you to find those that meet your investment objectives. This ensures that when comparing one fund with another, you are comparing funds with similar objectives or with similar underlying assets.
To view the IMA fund classification system chart, click here. For a list of the sector definitions, read on.
Funds principally targeting income - Immediate Income
Funds which invest at least 95% of their assets in sterling denominated (or hedged back to Sterling) Triple AAA rated, government backed securities, with at least 75% invested in UK government securities (Gilts).
Funds which invest at least 90% of their assets in UK Index Linked Government securities (Gilts)
Funds which invest at least 80% of their assets in Sterling-denominated (or hedged back to Sterling), Triple BBB minus or above bonds (as measured by Standard & Poors or an equivalent external rating agency – (Moodys Baa or above)). This excludes convertibles.
Funds investing at least 80% of their assets in Sterling denominated (or hedged back to Sterling), and at least 20% of their assets in below BBB minus bonds (as measured by Standard and Poor’s or an equivalent external rating agency), convertibles and income producing preference shares.
Funds which invest at least 80% of their assets in fixed interest stocks. All funds which contain more than 80% fixed interest investments are to be classified under this heading regardless of the fact that they may have more than 80% in a particular geographic sector, unless that geographic area is the UK, when the fund should be classified under the relevant UK heading.
Funds which invest at least 80% of their assets in the UK, between 20% and 80% in UK fixed interest securities and between 20% and 80% in UK equities. These funds aim to have a yield in excess of 120% of the FTSE All Share Index.
Note: To ensure compliance with the sector criteria, funds should supply data for monitoring to enable the calculation of yield based on the IMA guidelines set out in Yield Calculation and Disclosure by UK Authorised Funds- Guidelines for Managers Sept 2007.
Funds principally targeting income - Growing Income
Funds which invest at least 80% in UK equities and which aim to achieve a yield on the distributable income in excess of 110% of the FTSE All Share yield.
Note: To ensure compliance with the sector criteria, funds should supply data for monitoring to enable the calculation of yield based on the IMA guidelines set out in Yield Calculation and Disclosure by UK Authorised Funds- Guidelines for Managers Sept 2007
Funds principally targeting capital - Capital Growth/Total Return
UK ZerosFunds investing at least 80% of their assets in Sterling denominated (or hedged back to Sterling), and at least 80% of their assets in zero dividend preference shares or equivalent instruments (i.e. not income producing). This excludes preference shares which produce an income.
Funds which invest at least 80% of their assets in UK equities which have a primary objective of achieving capital growth.
Funds which invest at least 80% of their assets in UK equities of companies which form the bottom 10% by market capitalisation.
Funds which invest at least 80% of their assets in Japanese equities.
Funds which invest at least 80% of their assets in Japanese equities of companies which form the bottom 30% by market capitalisation.
Funds which invest at least 80% of their assets in Asia Pacific equities including a Japanese content. The Japanese content must make up less than 80% of assets.
Funds which invest at least 80% of their assets in Asia Pacific equities and exclude Japanese securities.
Funds which invest at least 80% of their assets in North American equities.
North American Smaller Companies
Funds which invest a least 80% of their assets in North American equities of companies which form the bottom 20% by market capitalisation.
Funds which invest at least 80% of their assets in European equities. They may include UK equities, but these must not exceed 80% of the fund’s assets.
Funds which invest at least 80% of their assets in European equities and exclude UK securities.
Funds which invest at least 80% of their assets in European equities of companies which form the bottom 20% by market capitalisation in the European market. They may include UK equities, but these must not exceed 80% or the fund’s assets. (‘Europe’ includes all countries in the MSCI/FTSE pan European indices.)
Funds investing in a range of assets with the maximum equity exposure restricted to 60% of the fund and with at least 30% invested in fixed interest and cash. There is no specific requirement to hold a minimum % of non UK equity within the equity limits. Assets must be at least 50% in Sterling/Euro and equities are deemed to include convertibles.
Funds would offer investment in a range of assets, with the maximum equity exposure restricted to 85% of the Fund. At least 10% must be held in non-UK equities. Assets must be at least 50% in Sterling/Euro and equities are deemed to include convertibles.
Funds would offer investment in a range of assets, with the Manager being able to invest up to 100% in equities at their discretion. At least 10% must be held in non-UK equities. There is no minimum Sterling/Euro balance and equities are deemed to include convertibles. At any one time the asset allocation of these funds may hold a high proportion of non-equity assets such that the asset allocation would by default place the fund in either the Balanced or Cautious sector. These funds would remain in this sector on these occasions since it is the Manager’s stated intention to retain the right to invest up to 100% in equities.
Funds which invest at least 80% of their assets in equities (but not more than 80% in UK assets) and which have the prime objective of achieving growth of capital.
Funds which invest 80% or more of their assets directly or indirectly in emerging markets as defined by the World Bank, without geographical restriction. Indirect investment e.g. China shares listed in Hong Kong, should not exceed 50% of the portfolio.
Note: The above sectors also require funds to be broadly diversified within the relevant country/region/asset class. Funds that concentrate solely on a specialist theme, sector or single market size (or a single country in a multi-currency region) would be incorporated in the Specialist sector (see below), or in the case of tech funds, in the Technology & Telecommunications sector.
For cautious managed please note the look-through principle will apply when considering securities that are legally equities but have different underlying assets such as property, commodities etc.
Funds principally targeting capital protection
Funds which invest at least 95% of their assets in money market instruments (i.e. cash and near cash, such as bank deposits, certificates of deposit, very short term fixed interest securities or floating rate notes).
Funds, other than money market funds which principally aim to provide a return of a set amount of capital back to the investor (either explicitly guaranteed or via an investment strategy highly likely to achieve this objective) plus some market upside.
Specialist Sectors
Funds that have an investment universe that is not accommodated by the mainstream sectors. Performance ranking of funds within the sector as a whole is inappropriate, given the diverse nature of its constituents.
Funds managed with the aim of delivering absolute (i.e. more than zero) returns in any market conditions.
Note:
Funds are classified to and remain in this sector on the basis of self election by firms with qualitative oversight by the Performance Category Review Committee (PCRC).
There is no asset based monitoring for this sector. Consideration should be given by those listing in this sector to the obligation for Treating Customers Fairly (TCF).
Typically funds in this sector would normally expect to deliver absolute (more than zero) returns in each year.
Performance comparisons are inappropriate due to the diverse nature of the objectives of the funds populating this sector, including differing benchmarks, risk characteristics and timeframes for delivering performance.
Absolute returns are made in the base currency of the fund. Investors may be subject to currency losses should the base currency be different to their domiciled/invested currency.
Funds listed in this sector do not guarantee returns.
Funds which are only available for use in a personal pension plan or FSAVC scheme.
Present arrangements for unit trust personal pension schemes require providers to set up separate personal pension unit trust under an overall tax sheltered umbrella. These funds then in turn invest in the group's equivalent mainstream trusts. Pension funds are not to be confused with "Exempt" funds which are flagged separately.
Technology & Telecommunications
Funds which invest at least 80% of their assets in technology and telecommunications sectors as defined by major index providers.
NOTE: In the gilt/bond sectors, a security with 0-3 months to maturity will be treated as cash. Securities maturing within 3-12 months will be treated as bonds. In the Managed sectors (Cautious Managed, Balanced Managed, Active Managed and UK Equity and Bond), cash and fixed income will be treated as interchangeable.