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Offshore fund influx could mean absolute sector split

Industry experts have warned that the Investment Management Association may have to split up the absolute return sector if a number of offshore vehicles move into it.

The IMA recently announced plans to allow offshore funds into its sectors, with almost 100 admitted so far.

Aberdeen multi-manager fund manager Scott Spencer says there are around 200 absolute return offshore funds and if many of those apply for status in the UK, the sector would need to be split.

He says: “The sector has grown from 17 to 41 funds in almost two years and you could argue for splitting it already but if a number of offshore funds come in, you are going to end up with a host of funds doing very different things.

“That trend is going to mean more work for fund managers and volatility bands could perhaps be the way forward.”

Cazenove head of UK advisory sales Robert Thorpe says: “I would prefer funds to be split on their strategy – through their beta exposure in the market. This would be a better option than splitting on volatility bands or geographic location.”

The IMA says it will review the sectors once all tranches have been added this year.

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