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Aberdeen in call for risk rating standard on splits

Aberdeen Asset Management is calling on the investment trust industry to develop a new standardised risk-rating system for split-capital trusts.

The proposals, outlined in Aberdeen&#39s response to the FSA&#39s split-cap consultation paper, argue that an “industry-standard rating system of share-classes” would help ens-ure that advisers and direct investors understand the full risks involved with split-caps.

Aberdeen suggests that ABN Amro&#39s existing splitcap ratings may be a good base for the new system. This rates funds in relation to both their levels of cross-holdings in other splits and their levels of gearing.

Aberdeen also suggests that national newspapers should be encouraged to carry more detailed analysis of split-caps.

Head of investment trusts Piers Currie says: “The timeliness of information is as meaningful as putting an additional ratings system into place. We want to make more det-ailed information available more quickly.”

The AITC also issued its response to the FSA&#39s paper this week, warning the regulator to think carefully before rolling out additional regulation.

In his response to the regulator, AITC director general Daniel Godfrey said: “When markets perform badly and investors lose money, it is natural for those who have lost money to assume that someone else is to blame.

“However, this alone must not be allowed to become an automatic signal for additional regulation unless it can be shown that the current regulatory system is defective.”

The response was in a very different tone to Godfrey&#39s speech at the AITC&#39s directors&#39 conference two weeks ago, where he told the industry to accept responsibility for the problems in the splits sector.

Jupiter head of investment trusts Andrew Watkins says: “This is much more the kind of thing you want to see coming from your trade body.”

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