Multi-manager Hawksmoor believes it is difficult, if not impossible, to legislate that a fund is being managed cautiously.
Its comments follow criticism of some funds for exceeding the IMA cautious managed sector limit for equity exposure.
The firm says cautious means different things to different people and it can be difficult to classify some investments within the IMA guidelines of up to 60 per cent in equities, at least 30 per cent in cash and fixed interest and at least 50 per cent in sterling and euro-denominated investments.
Some equities are lower risk than some bonds, which complicates the idea that equ-ity exposure needs to be limited while a minimum exposure to base currency assets and fixed-interest securities is needed to control risk.
Chief investment officer Richard Scott says: “We think it is incumbent on the fund manager to clearly communicate with investors what they see as their mandate in terms of running a cautious fund.”