View more on these topics

Fidelity says new IMA sector labels are bad news for consumers

Fidelity International has slammed the new Investment Management Association managed sector definitions, claiming they are now even harder for investors to understand.

Yesterday, the IMA announced plans to rename the active, balanced and cautious managed sectors managed A, B and C and create a new managed D peer group for the least risky managed funds.

The IMA says the move is designed to indicate that funds are ‘”managed’” and therefore more subject to “a degree of manager discretion”, or freedom to move money between different types of assets.

It says: “Additionally, the names are intended deliberately to provide no other information about the sector, thereby encouraging users of the sectors to do more due diligence to understand the nature of funds that would fall into the underlying sectors,” the group’s report explains.”

Fidelity International UK managing director Gary Shaughnessy says: “To say we are disappointed in the outcome to this review is an understatement. The IMA has said that it is important that these sectors are properly understood by investors, but in our opinion the new sector differentiations are meaningless and actually increase the opacity for investors.
“The ABI changes were much nearer the mark and we had hoped the IMA would improve on this further. Instead, the IMA has wasted the opportunity to write meaningful sector definitions that can be properly understood by investors. At a time when transparency and understanding are key for our industry to engage with our customers, this seems a retrograde step and we urge the IMA to think again.”

In March this year both advisers and providers hit out at the Association of British Insurers’ overhaul of the managed sector labels, saying they imply that equities provide the only element of risk.

Sector names, including defensive, cautious, balanced and flexible, were replaced with “mixed investment” and a statement of how much each type of fund can hold in equities.


News and expert analysis straight to your inbox

Sign up


There are 2 comments at the moment, we would love to hear your opinion too.

  1. I wholeheartedly agree. Surely in trying to adequately explain to a client the “risk” associated with the new A,B, C & D labels, advisers would possibly end up using words such as “Adventurous”, “Balanced”, “Cautious” and “Defensive”!
    Is it just me, or is there an element of The Emperor’s Clothes here – how does this “designed move” indicate funds are managed? I would have thought the existing labels would do so better.

  2. Roger above beet me to it. We have been using ABC for adveturous balanced and cautious for 30 years or more.

Leave a comment