IMA adopts ABI model for managed sectors

30 November 2011 11:08 am | By Chris Salih

The Investment Management Association has adopted the ABI’s model for the managed/mixed investment sectors in a bid to provide better clarity and comparability for investors.

The move sees the active, balanced and cautious sectors fall under the ABI sector names. The cautious sector becomes mixed investment sector 20-60 per cent shares, the balanced sector becomes mixed investment 40-85 per cent shares and the active managed falls under the flexible investment sector banner, previously known as mixed investment 60-100 per cent shares under the ABI’s terms. The ABI also offers a mixed investment sector 0-35 per cent shares and this has been created in the IMA sectors. The percentages indicate the minimum and maximum exposure a fund manager can have in their fund to equities.

The changes come into effect from January 1, 2012. Firms have until April 2012 to make the neccessary changes to their funds. Both the IMA and the ABI will issue guidance to their members on the new names and definitions.

The IMA was slammed by both fund managers and advisers after announcing in May that it plans to rename the active, balanced and cautious sectors as managed A, B and C as well as creating a new managed D peer group for the least risky managed funds.

The IMA said the aim was to indicate that funds are “managed” and more subject to a degree of manager discretion. Many in the industry claimed the decision did not add any clarity on the risk profile of funds.

The IMA pushed back the implementation date for its managed sectors to October 1, 2011 after members called for more time to respond to the proposals.
The decision resulted in a four month delay on the original implementation date of July 1, 2011.

Commenting on the changes, ABI director of financial conduct regulation Maggie Craig (pictured) says: “Alignment of the IMA and ABI mixed investment sectors provides greater clarity for users, particularly consumers. The sector names will give consumers a better understanding of how their fund might be invested and dropping terms such as ‘cautious’ should encourage the industry to carefully consider the use of such terms in the future.”

IMA director of markets Jane Lowe says: “We are delighted that our conversations with the ABI have resulted in such a fruitful collaboration, which will create consistency across these sectors.

“The four mixed investment sectors clearly communicate a spectrum of options available to consumers. The names provide an at-a-glance look at the funds’ exposure to shares, while investors can get further detail on what they are investing in by studying the definitions.”

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