UK Equity Income portfolios will have to conform to a sector definition based on gross yields if the...
UK Equity Income portfolios will have to conform to a sector definition based on gross yields if the IMA's proposals are accepted by members.
The IMA Performance Category Review Committee (PCRC) is recommending an amendment to the definition for the sector, which will refer to the gross yield on the underlying portfolio.
The present definition makes no mention of what yield basis is being used. It simply states that UK Equity Income funds must have at least 80% of assets in UK equities and aim to have a yield in excess of 110% of the yield of the FTSE All-Share.
Dorian Carrell, head of statistics at the IMA, said the clarification has been made to ensure the sector can be properly monitored on a monthly basis, as yields cannot entirely consistent for performance measurement once charges are taken into account.
The proposed new definition of UK Equity Income funds reads: 'Funds which invest at least 80% of their assets in UK equities and which aim to achieve a yield on the underlying portfolio in excess of 110% of the FTSE All-Share yield (net of tax). The distributable income may differ from the yield quoted in financial publications.'
In March this year, the PCRC decided it would not apply a rule on how groups take the charges off capital and income in the equity income sector.
The PCRC is also proposing to change the Smaller Companies sector definition from the bottom 10% of market cap to 20% in Europe and North America, and 30% in Japan.
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