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Fund managers slam proposals

Fund managers say proposals in the FSA&#39s report on past performance in ads are impractical and misleading and are calling for more debate.

The FSA taskforce report, which suggests that standardised measures of risk and past performance should be devised for investment ads, is lambasted by fund managers. They argue that risk is too complicated to be shown as a single statistic and that any attempts to do so may be more misleading to the consumer.

Providers also say any attempts to push past performance on to the sidelines of investment ads will render ads increasingly ineffective, defeating the Government&#39s aim of encouraging a stronger equity inv-estment culture.

Threadneedle communications director Richard Eats says: “Single measures of risk are something that makes us knot our brows. These tend to be quite statistical and making them understandable for inves-tors will be a problem.

“Risk is not constant. Markets, and indeed funds, can become more or less risky, so if you try and go for some single measure, it may be obsolescent by the time you have invented it.”

Aberdeen Asset Management managing director Gary Marshall says: “One of the end results is that you almost cut out the adviser by trying to capture everything in one measure.”

Commenting on the proposal to shift past performance from being the main focus of an ad, Marshall says: “I wonder how far the industry is going to be pushed from advertising what is already a very difficult concept? I see where the FSA is coming from but it is very difficult marketing such an intangible product.”

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