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Now the FSA tells the public to ignore funds&#39 investment strategy

The FSA has been heavily criticised by IFAs and fund managers for warning investors using its comparative tables not to consider investment process when choosing a fund.

They claim that the regulator&#39s move is irrespon-sible as the process used is often an essential element in making an investment decision.

In an accompanying note to the tables entitled, More about investment strategy, the FSA says investment process is not a reliable way of selecting investments because there is a risk that fund managers may move on or the firm&#39s investment process may be altered by a merger or acquisition.

Instead, the note encourages investors to consider only geographical weightings and differing asset allocations, which it says is what “determines the risk and return profile of the fund”.

It says: “Investment strategy is how some fund managers differentiate themselves from other fund managers. This is not a wholly reliable method of selecting investments, as individual fund managers change from time to time.

“Also, some fund management groups are owned by another company, possibly based overseas. Ownership can and does change and this might have an impact on the investment policy of the firm.”

But fund managers and IFAs have hit back, saying investment process is central to fund selection.

Hargreaves Lansdown head of research Mark Dampier says: “If you look at a company like Liontrust, investment process is at the centre of their business. I agree with the FSA that the process might change but it is still crucial.”

Liontrust marketing director Jonathan Harbottle says: “For the FSA to be saying you should not look at the investment process is irresponsible.

“The way that the fund is run is utterly key to investment selection.”


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