Fund managers are set to have their fund allocations scrutinised by a new
monitoring service being introduced by Autif, PIMS delegates were told.
Autif sector definitions, which lay down guidelines on how much of a fund
can be invested in different types of securities and geographical regions,
have led to disputes, with some managers claiming that rivals are flouting
The balanced managed sector, which stipulates that a minimum of 10 per
cent of the portfolio is to be invested in non-UK-listed equities, is
reg-arded as particularly prone to problems. In other sectors, managers
have ignored the equity-cash ratios by investing more in equities to gain a
performance advantage. Autif has asked data providers Lipper, Morning Star,
The Research Department and Standard & Poor's to find a solution.
Until now, Autif has relied on fund managers' own discretion in sticking
to the guidelines. However, temporary breaches are sometimes permitted in
the case of company takeovers, which shift the balance of a portfolio, or
large inflows to the fund, which temporarily shift cash balances.
Autif director general Rich-ard Saunders says: “If funds are wearing a
class badge, they should stick to it. People should be able to compare like
with like. Fund managers should keep within the box prescribing their fund.”
Autif communications dir-ector Anne McMeehan says: “We have provided a
brief to Lipper, Morning Star, The Res-earch Department and Standard &
Poor's asking if we wanted to monitor funds more accurately to understand
precisely what is needed in a portfolio to ensure the right fund is in the
right sector at the right time, how would we best go about it.”