Around 5% of funds in the UK All Companies sector are in breach of the sector's definition that at l...
Around 5% of funds in the UK All Companies sector are in breach of the sector's definition that at least 80% of holdings must be in domestic equities.
The finding comes in the first sector monitoring report delivered last week as the IMA, with Lipper, began actively policing its fund sectors.
The trade body, which sets a definition for each of its 27 sectors set out in full on its website at www.investmentfunds.org.uk, will not reveal which of the 360-plus funds are currently outside sector guidelines.
However, each of the asset managers is being contacted, firstly to check that Lipper's data is correct, and secondly to give them a period of up to four months to move back within the definition.
Those refusing to meet sector requirements, or which persistently stray beyond the definition of the sector, will then be referred to the Performance Category Review Committee (PCRC) which is made up of industry practitioners. It has the power to move them to other sectors it deems more appropriate.
A further unclassified sector is to be created by the IMA for funds which do not intend to follow the sector definitions. These, according to Dorian Carrell, head of statistics at the IMA, will largely be made up of funds aimed at institutional investors.
The new sector will be created on 1 October when a second, all-sector report will be delivered by Lipper, which has been working over the past 12 months to institute monthly portfolio feeds from fund management groups.
It is this information, which breaks down portfolios to individual holdings, from which the sector monitoring reports are created. Until Lipper was appointed to monitor sectors, the only time that funds were revealed to be outside of sector definitions was when whistleblowers alerted the IMA. In the past two years, 34 funds have been reported, according to Carrell.
There are currently no plans to monitor the Guaranteed/Protected, Index Bear, Pension or Property sectors.
The IMA believes monitoring the sectors is a self-regulatory move unmatched by any other country in the world. In the US sector monitoring is conducted twice a year from printed fund reports.
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