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Fund firms get freedom mix

Unit trust and Oeic managers will see the majority of new funds launched classed as mixed funds, allowing them greater freedom in investing under new FSA rules on classification of asset classes.

Most new funds after November 1 will be classified as mixed funds and will be allowed to hold a greater mix of assets including property, bonds, equities and cash.

The rules are detailed in Feedback to CP135 published last week. The plans were outlined in CP135, New Collective Investment Scheme Products, published in April and originate from the implementation of the Ucits directive.

They will not be subject to the same degree of scrutiny as existing mainstream equity funds, which limit holdings in other collective schemes to 5 per cent and force funds of funds to be invested entirely in other collectives.

A mixed fund is not constrained on the amount that can be invested in acceptable asset classes but is prevented from investing more than 10 per cent in any one holding.

Exceptions to the rule changes include property funds, futures and options and feeder funds.

Another change will see use of the word guarantee in a fund name allowed for those funds which have a full money back guarantee.

Chase de Vere savings & investments manager Anna Bowes says: “The slight concern I have with this is now that fund managers are suddenly allowed to put whatever they want into funds is that they do it properly. Just because they can does not mean they should unless they know how to.”

IMA technical adviser Ros Clark says: “The majority of funds already in existence will probably stay the same. But for new funds it will allow greater flexibility in how they are structured and how they invest.”


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