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Insight bucks trend in move out of Nurs

Insight Investment is bucking the industry trend by converting its diversified target return fund from a non-Ucits retail scheme structure to Ucits III next month.

Most multi-managers have been converting their funds from Ucits III to Nurs to access the greater investment flexibility that enables. But Insight says Nurs funds require life insurance companies to conduct more due diligence than Ucits III funds and converting the fund it will make it easier to distribute through unit-linked life insurance products.

Unlike Ucits III funds, Nurs funds can invest in unregulated portfolios, property and gold. The limit for investments in transferable securities that are not approved is 20 per cent for Nurs funds – double the limit for Ucits III funds.

But the FSA has yet to update the rules that determine what unit-linked funds can invest in, meaning some Nurs funds may not be acceptable because of these investment powers.

Insight says that when the diversified target return fund was launched in February 2005, Nurs was the only way to achieve its objective. Since then, absolute return funds have been launched under the Ucits III structure, which the fund now holds.

The ability to invest directly in property through Nurs is not an issue for Insight as it believes sufficient exposure to property can be achieved by investing in property funds rather than direct investments.

Head of business management and products Brett Greatrex says: “We think the Ucits brand is simple for unit-linked life companies to add to their platforms as more due diligence is required for Nurs. There might be Nurs funds a life company could not be linked to because of the way they use derivatives, for example.

“Ucits III funds can use derivatives as well but, because the brand is widely known, less due diligence is needed. This is an anomaly. We have spoken to the FSA about it and I am sure the rules will be updated in time.”

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