Fund managers call for risk-based approach to IMA managed sectors

Fidelity, Cazenove and Apollo have hit out at the Investment Management Association’s changes to its managed sector definitions and called for a risk-based approach.

Fidelity UK managing director Gary Shaughnessy believes that the new system is “a retrograde step”.

He says: “The definitions should denote what risk assets are in the fund, such as equities, property and derivatives, to give investors an idea of where the fund sits in terms of risk.”

Cazenove head of multi-manager Marcus Brookes says: “The new definitions do not tell you what is in the fund. I would like to have seen classifications that clearly show the intended risk outcome of the sector rather than A, B, C and D. “So, for example, the label on an active fund should include the fact that it would have equity-like volatility of 20 per cent per annum, with drawdowns expected of up to 50 per cent. An equity label by itself does not tell investors much.”

Apollo partner Tom McGrath says: “The IMA needs to classify according to volatility by assessing a fund’s risk profile.”