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IMA says extend past performance data to RDR share classes

Jane Lowe IMA 200

The Investment Management Association has recommended fund managers extend the past performance track record for existing retail share classes to their new RDR share classes.

The IMA has issued guidance to its members today which says the impact of higher fees within existing classes should be retained from next year for new RDR share classes. The guidance follows consultation with members and discussions at committee level.

The trade body says it has decided to publish the guidance to ensure consistency across the market in presenting past performance data for RDR share classes “in the absence of regulatory guidance”.

Fund managers have been advised to nominate their primary RDR share class and notify the IMA as soon as possible.

Offshore funds have been told to inform the IMA of their highest charging share class sold into the UK, if different from their nominated share class for classification, as well as nominating their primary RDR share class.

Where firms intend to use an institutional share class as an RDR share class they should let the IMA know and provide the fee structures for both share classes.

If the fees on the institutional share class are similar or higher than for the new RDR share class, the record of the existing record of the institutional share class may be extended to the new share class. The firm should explain their approach based on treating customers fairly principles.

If the fees on the institutional share class are lower than on the new RDR share class, then the request will be reviewed by the IMA and a decision issued.

IMA director of markets Jane Lowe (pictured) says: “Using historic track records based on the higher fees of existing retail share classes is the more cautious approach to presenting the data to investors. It is typically more representative of what they will have experienced.

“Using synthetic track records – those that exclude adviser charging – could mislead consumers into believing the industry has delivered better performance than it has.”

The IMA will review its approach next year.


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There are 2 comments at the moment, we would love to hear your opinion too.

  1. “In the absence of regulatory guidance”

    Just goes to show how poorly the RDR has been constructed and how it will be shown to be such a mess that the FCA will more than likely have to change EVERYTHING again and soon!

  2. I haven’t read the regs recently, but I’m pretty sure they didn’t legislate for needing an ‘rdr’ share class; just not paying commission. That fund managers are launching clean share classes that have lower charges because they can’t/don’t have the cost overhead of commission anymore isn’t something that needs regulatory guidance. The regs around providing performance data are the same as they were before AFAIK.

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