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IMA AND ABI HARMONISE MANAGEDMIXED INVESTMENT SECTORS TO BENEFIT CONSUMERS

The IMA and ABI have today announced that they are harmonising their Managed/Mixed Investment sectors to provide greater clarity to consumers, creating consistency and comparability across insurance and investment funds.  

Both the IMA and ABI conducted qualitative and quantitative consumer research with further consultation with IFAs, funds of funds managers, platforms and other market participants. The IMA's consumer research* found that when presented with sector definitions, investors focused on the percentage exposure to asset classes. The majority of UK active investors said the sector name was not the most important factor in deciding what to invest in, but a quarter (28%) have used the sectors to help them reach their final investment decision, so the sector names need to act as a useful signpost.  

The ABI's consumer research** showed that customers want jargon-free names for fund sectors to give them simple information about the minimum and maximum exposure to shares. The research found the Mixed Investment format was significantly less likely to lead to consumers misinterpreting the type of funds they choose to invest in.  

As a result the IMA and ABI have agreed upon a single set of sector names and definitions:  

NEW IMA & ABI NAMES

OLD IMA NAMES

OLD ABI NAMES

Mixed Investment 0-35% Shares

N/A

Mixed Investment 0-35% Shares

Mixed Investment 20-60% Shares

Cautious Managed

Mixed Investment 20-60% Shares

Mixed Investment 40-85% Shares

Balanced Managed

Mixed Investment 40-85% Shares

Flexible Investment

Active Managed

Mixed Investment 60%-100% Shares


The sector names indicate the mixed asset make-up of the funds and the maximum and minimum amount of shares permitted. The definitions*** set out the permitted investments in each sector, including the percentage exposure to equities, fixed income and cash investments and currency requirements. Although the definitions have changed, many of the limits on asset class exposure remain broadly consistent with both the ABI and IMA's previous limits.  

The Flexible Investment sector (formerly the IMA Active Managed Sector and the ABI Mixed Investment 60%-100% Shares Sector) permits the fund manager to exercise significant flexibility over asset allocation and does not have a minimum or maximum for equities.  

The changes will come into effect from 1 January 2012. Firms will have until the end of April 2012 to make the necessary changes to their funds.  

Both the IMA and ABI will issue guidance to their members on the new sector names and definitions.  

Maggie Craig, Director of Financial Conduct Regulation, ABI commented:  

"Alignment of the IMA and ABI mixed investment sectors provides greater clarity for users, particularly consumers. The sector names will give consumers a better understanding of how their fund might be invested and dropping terms such as ‘cautious' should encourage the industry to carefully consider the use of such terms in the future."  

Jane Lowe, Director of Markets of the IMA, commented:  

"We are delighted that our conversations with the ABI have resulted in such a fruitful collaboration, which will create consistency across these sectors.  

"The four mixed investment sectors clearly communicate a spectrum of options available to consumers. The names provide an at-a-glance look at the funds' exposure to shares, while investors can get further detail on what they are investing in by studying the definitions."  


Last updated 01/07/2016