The IMA has decided against including offshore FSA-recognised funds within its sector categorisation...
The IMA has decided against including offshore FSA-recognised funds within its sector categorisations.
Some groups, such as Close Finsbury, have been pushing for the inclusion of regulator-recognised offshore funds into the onshore fund rankings, but the IMA's Performance Category Review Committee (PCRC) believes tax treatment, charging structures and investor compensation cover do not allow for meaningful comparison.
An IMA spokesman said: 'Differences in investor compensation, permissible assets, valuation mechanisms (and their frequency), transparency (wrapper costs and what can be charged to the fund), taxation of dividends and the differences in permissible use of synthetic past performance were all highlighted by respondents as obstacles to fair, clear and not misleading performance comparisons across different jurisdictions.'
This conclusion was in line with the views of the majority of IMA members, polled last year on the issue. They agreed broadly with the proposition that fund structures permitted in Luxembourg or Dublin, although very similar to those in the UK, were not the same.
Most respondents expressed the view that all FSA recognised funds should be grouped together, regardless of domicile, in one product category.
The IMA said it was happy if data providers wanted to present information in a way that aided comparison between onshore and offshore funds as long as it did not mislead investors into thinking that FSA-authorised and FSA-recognised are one and the same thing. Even so the trade body has left the door open for offshore FSA-recognised funds to be allowed into the onshore sector, if any company can prove a case for it.
In particular, this means if the differences between onshore and offshore funds outlined by the IMA and its members disappear over time.
As well as ruling out the addition of offshore FSA-recognised funds into the onshore sectors, the IMA has, for now, decided against splitting the UK All Companies sector into sub-sectors, such as value, growth, blue chip, or mid-cap.
Dorian Carrell, head of statistics at the IMA, said: 'The PCRC must now consider any changes to IMA sector definitions in light of the sector monitoring sector project that starts in June this year.
'The UK All Companies sector will be the first to be monitored and compliance with the sector definition will be measured against an index representing UK companies
'Given this, the committee believes that style-based sectors would prove difficult to monitor, as universally accepted definitions of value and growth stocks do not exist.'
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