The Association of British Insurers has launched a review of its life and pension fund sectors which categorise more than 6,000 unit-linked life and pension funds worth more than £500bn.
The sectors aim to enable advisers and consumers to compare similar funds on a like for like basis and are independently monitored by the ABI.
There will be a period of consultation during which the ABI will seek the views of providers and advisers on a range of proposals to improve the sector criteria, which include new rules for mixed-asset fund sectors, the introduction of three new fixed-interest sectors, new sectors to reflect the growing number and diversity of property funds and the introduction of a flag system to allow greater detail on sector sub-groupings.
ABI investment classification committee chairman, Jeremy Thatcher, says: “Our proposals will refresh the sectors and reflect ongoing market changes affecting life and pension funds.
“As part of the review, we initiated discussions with the Investment Management Association to work towards the goal of greater harmonisation of fund sector parameters.”
Credit Suisse director of product management, Toby Hogbin, says: “We are increasingly seeing the adoption of open architecture type solutions from life companies in which mutual funds produced by specialist asset managers are offered as investment options within the life companies products.
“This move towards the alignment of ABI and IMA sector classifications should enhance the ability of advisers to compare performance data of funds when building portfolios to target their clients’ needs.”
New Star Asset Management marketing director, Richard Wilson, adds: “The idea of making a distinction between funds that hold UK direct property and those that hold UK property shares is a good one – investors need to be clear about the pros and cons of the two types. For example, property share funds are potentially more volatile than direct bricks and mortar funds.”
The deadline for responses to the consultation is July 13 and the ABI’s final proposals will be published later this summer.