In a release, the IMA says that it supports the Association of British Insurers’ (ABI) proposal to add a new “cash-like” money market sector definition as part of a Europe-wide review.
Funds in the Money Market sector have faced criticism in the press because of their managers’ varied use of tools. Some have used complex instruments such as derivatives, while others have simply spread investments across deposit accounts. Therefore, the risk/reward profiles of Money Market funds can be dissimilar.
Nicola Kembey, head of sectors at the IMA, says: “We believe that this work is essential both to support the integrity of the funds in the sector, and to ensure that consumers understand what they are buying when investing in a fund with this label, regardless of their country of residence.”
She added the decision on whether to introduce a new definition would also depend on the number of funds that could sit in the new sector, as only 32 are now listed under Money Market.