The proposed new sector would exist in parallel with the existing money market sector, and would have stricter limits on the type of instruments funds can invest in and their maturity.
It is hoped the new sector will help consumers identify funds that have a greater focus on capital stability.
The closing date for ABI’s consultation May 8 and will be reported on shortly afterwards.
ABI fund sectors categorise different types of investment fund, allowing consumers and financial advisers to compare funds with similar investment profiles against each other.
ABI’s director of life and savings Maggie Craig says: “This initiative is in direct response to what consumers and advisers have been telling us they want. With volatility in the markets many people want to easily choose a stable way to invest their money.”
The IMA has welcomed the proposal for a new cash-like money market sector definition and has also been reviewing its own money market sector to which is expected to conclude towards the summer.
It is reviewing whether it should adopt the new ABI “cash like” money market fund sector definition, in addition to any other changes which come out of the European review to minimise confusion for UK consumers.
The decision, it says, will also depend on how many funds could populate the new sector as there are currently only 32 funds across the whole IMA money market sector.
IMA head of sectors Nicola Kembey says: ” We believe that this work is essential both to support the integrity of the funds in the sector, and to ensure that consumers understand what they are buying when investing in a fund with this label, regardless of their country of residence.