Schroders head of UK retail sales Neil Bridge says he would like to see the UK All Companies sector split according to funds’ market capitalisation.
Bridge feels there are too many funds in the sector but says the Investment Management Association should not break it up into too many sub-sectors. He says: “It would be good for funds to only qualify for the sector if they have 50-60 per cent of their holdings in FTSE 100 stocks, as that would bring the sector numbers down by a substantial amount. It would also raise competition among small and mid-cap funds.
“The sector is simply too large as top quartile means you are in the top 75 best performing funds. I do not believe it matters if funds are ethical or there are other offshoots that sit in the sector. If they qualify according to market cap then I believe that is a fair criteria.”
In August, the IMA revealed it is conducting the biggest review of its fund sectors in a decade amid the substantial impact of Ucits III and the RDR.
Chelsea Financial Services managing director Darius McDermott supports Bridge’s calls but feels the sector needs to be broken up even further.
He says: “This would be a start but there is scope to go further.”