At present the sector takes its definition of an emerging market from the World Bank. However, from February 1, the definition will be based on the relevant FTSE or MSCI global emerging markets index.
As such, the new sector definition for those funds in the sector—which totals 35 according to the IMA—states they “must invest 80 per cent or more of their assets in emerging market equities as defined by the relevant FTSE or MSCI global emerging markets index”.
The current sector definition reads: “Funds which invest 80 per cent or more of their assets directly or indirectly in emerging markets as defined by the World Bank, without geographical restriction. Indirect investment, e.g. China shares listed in Hong Kong, should not exceed 50 per cent of the portfolio.”