BlackRock UK equity manager Mark Lyttleton says he is not concerned by any plans the Investment Management Association may have for changing the absolute return sector.
Lyttleton manages one of the flagship funds in the sector, the £2.1bn BlackRock UK absolute alpha fund, which launched in April 2005.
Speaking at the Fund Strategy Investment Summit in Kitzbuhel, Austria last week, Lyttleton said: “As far as I am concerned, anyone who invests in the absolute return sector needs to understand that all the funds are different.
“They all have different ways of investing, tolerances to making and losing money and differing volatility. You need to understand the environment these funds work in.”
Earlier this month, the IMA suggested linking the absolute return sector with managed sectors in a bid to categorise the risk level of funds. It is also understood to have looked at splitting the sector into two, with one and three-year rolling timeframes.
Lyttleton said all that matters to him and BlackRock is that people buying the fund understand its process.
He said: “We want to make sure that we are delivering on our promises and if you are running an absolute return fund which is making 10 per cent one year and losing 20-30 per cent the next, you are not doing that.”
Lyttleton, who also manages the £600m BlackRock UK and £1.5bn UK dynamic fund, said he expects a number of his special situations holdings to “explode upwards” in 2011.
He said: “Some of these stocks have been sitting in the portfolio for a while and it feels like this year may be the year they take off.”