BlackRock head of UK retail sales Mark Elliott says the IMA should look to introduce volatility bands for the absolute return sector to improve transparency.
Elliott says since the IMA launched the absolute return sector five years ago, it has grown at a rapid pace and now has over 60 funds in the sector. BlackRock has the £1.8bn UK absolute alpha fund in the sector, managed by Mark Lyttleton.
Elliott says: “The sector now has as many as 11 different strategies and that can only cause confusion. We feel that rating funds on volatility is a sensible route given the construction of these funds. You cannot compare an absolute return equity and bond funds.”
Elliott also says the IMA should not include absolute return funds in its new managed sector D, which will have a 35 per cent maximum exposure to equities.
Elliott’s comments echo those of M&G head of global sales Jonathan Willcocks.
Hargreaves Lansdown senior analyst Meera Patel says: “Absolute return may have a big remit but putting them in the managed D sector would only add to the confusion.”