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New shores

Chris Salih on the IMA’s move to add offshore funds

The Investment Management Association is ready to include offshore funds in its sector classifications from April 1.

It has accepted 71 out of 180 requests to add funds. A further 89 are pending, with 20 deemed ineligible for inclusion.

The IMA will introduce a second tranche of funds in the near future and a third in the final quarter. It will flag up which funds within each sector are offshore.

The first tranche of funds comes from big names, including HSBC Global Asset Management, Schroders, JP Morgan Asset Management, Franklin Templeton and Investec.

HSBC Global Asset Management managing director of UK wholesale Andy Clark says: “We have long said there needs to be a shake-up, especially given there are many high-quality offshore funds available to UK advisers. These funds have often not been on the radar because they do not appear in the IMA tables. We expect the specialist sector will be of interest, as many emerging market funds come to the fore.”

The biggest impact of the first tranche will be on the specialist sector, with 36 funds being added. Among them are a raft of single-country offerings from emerging nations.

Chelsea Financial Services managing director Darius McDermott says: “Once we start to see eight to 10 types of funds, whether single-country, commodities or other assets, then introducing a sector is a valid call. We do not want to see gold funds lumped in with Indian funds, for example. Having these sectors would make an adviser’s job easier.”

McDermott’s call looks valid when you consider the IMA European, North American, Japanese smaller companies and tech and telecoms sectors all have fewer than 15 funds.

IMA head of communications Ginny Broad says the sectors will be reviewed as the year goes on and that once all the tranches have been added, there will be a fuller picture. She says: “It is not just about having enough funds to create a sector. We need to see enough difference between sectors as well having confidence in them being around in the longer term.”

Schroders managing director of UK intermediary business Robin Stoakley says: “There are always sector anomalies, as we have seen with global and UK all companies. The majority of offshore products are specialist but I think advisers would like a fair comparison. If that increases the number of sectors from 33 to 40, that is not such a big problem.”

Clark says the move should also encourage platforms to introduce more offshore funds.

He says: “Although some platforms have made progress in recent years, others now need to adapt to include offshore funds, so they can provide the best possible choice of funds to UK advisers, irrespective of where they are domiciled.”

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