The ABI has announced an overhaul of managed fund sector labels from April.
Sector names including “defensive”, “cautious”, “balanced” and “flexible” will be replaced with “mixed investment” and accompanied by a clear statement of how much each type of fund can hold in equities.
ABI acting director of life and savings Helen White says: “It was becoming increasingly clear that terms like ‘cautious’ were confusing for consumers, so the ABI was keen to act quickly and make changes to help customers.
“Our research found that customers want simple information about the minimum and maximum amount of their money that an investment fund will put into shares. The new fund names do just that.”
The ABI managed fund sector contain almost 2000 life and pension funds worth around £340bn, 80 per cent of which are invested in managed funds.
The Investment Management Association is also reviewing its managed fund sectors but is not expected to announce changes until the end of 2011.
IMA director of markets Jane Lowe says: “The IMA has been evaluating its own sector classification scheme since autumn 2010. It is vitally important that this work is handled carefully in order to deliver the right result for consumers.
“The IMA’s Sector Review is a wider ranging evaluation than the ABI’s research, which is focused principally on the naming of their managed sectors.
“We welcome the work undertaken by ABI and will take it into account as we reach conclusions for our own sector scheme. However the timetable of any changes to the IMA sector scheme will remain distinct from that of the ABI.”