Fund managers are doubtful there will be much interest in joining the Investment Management Association’s new mixed investment 0-35 per cent shares sector due to the equity restrictions.
Last week, the IMA concluded its review into the managed sectors and aligned them with the Association of British Insurers’ definitions.
The cautious sector will be called mixed investment 20-60 per cent shares, the balanced sector will be called mixed investment 40-85 per cent shares and the active managed sector will be called flexible investment. The percentages indicate funds’ minimum and maximum equity exposure.
The IMA has also created a new sector in line with the ABI’s mixed investment 0-35 per cent shares sector.
Thames River multi-manager Gary Potter (pictured) has questioned whether managers will want to move their funds into the new sector. He says: “Some fund managers may tweak their allocations to stay in the mixed investment 20-60 per cent shares sector as it is one of the fastestselling sectors.”
Potter says there are no plans to put Thames River’s £307m distribution fund or its £261m cautious managed fund in the mixed investment 0-35 per cent shares sector.
He says: “Our distribution fund has held more than 35 per cent equities since launch and we have no immediate plans to change the sector placement of the cautious managed fund as its investment philosophy does not fit the new sector.”
Investec Asset Management managing director David Aird has ruled out including the £2bn Investec cautious managed fund in this new sector.
He says: “We believe the investment philosophy of our cautious managed fund fits the mixed investment 20-60 per cent shares sector. The mixed investment 0-35 per cent shares sector is too restrictive. In my experience, more money is invested in funds that are in middle-of-the-road risk buckets such as mixed investment 20-60 per cent and mixed investment 40-85 per cent shares rather than the outliers.”