The Association of Unit Trusts and Investments Funds is calling on the financial services industr...
The Association of Unit Trusts and Investments Funds is calling on the financial services industry to provide greater transparency of investor costs and past performance disclosure, in a bid to provide investors with a clearer view of the investment risks.
Speaking at the association's AGM, outgoing chairman Alan Ainsworth, expressed a need for greater industry transparency and addressed three main issues, which he believes would lead to improvements in investor understanding and confidence.
Among other things, said Ainsworth, there is a need for a clear regulatory definition of investment advice and disclosure of the nature of the advice relationship and development of a standardised and simple measure of total investor costs.
The importance of adhering to a standard, simple form of past performance disclosure also needs to be pressed home to all investment managers, with Ainsworth citing past performance as "the most important fund transparency issue".
"The recent volatility in equity markets underlined the importance of investor confidence and understanding to our business," he said.
"The future of the industry depends on building a client base that understands the risks associated with long term returns."
Selective transparency in the use of past performance statistics needs to be eliminated, according to Autif, a crime of which Ainsworth said the investment funds industry has been guilty.
"All the evidence I have seen leads me to believe that this industry should standardise on discrete annual performance over given periods, preferably not less than 5 years."
Alan Ainsworth stepped down as chairman of Autif at the AGM. His successor is Alan Burton, managing director of Standard Life Investments (Mutual Funds).
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