The conversion of funds of funds into non-Ucits retail schemes (Nurs) may be delayed, as such a move would leave vehicles ineligible for life links. Despite now being eligible for Isas, if a fund of fund operated under Nurs, then only 5% of its total assets could come from any link it had to a life wrapper.
This is because the regulations concerning permitted links have not yet been updated to coincide with the Coll sourcebook, which has paved the way for the Nurs structure.
Groups with existing Nurs funds of funds or looking to change include New Star, Credit Suisse and Hendersons.
Under the Nurs regime, funds can take more concentrated holdings as well as introduce up to 10% structural borrowing. Under Ucits structures, groups with a number of different fund of fund vehicles within one umbrella are limited in the size of holding they can take across the umbrella's fund range, but this does not apply to Nurs vehicles.
Head of product management at Credit Suisse, Toby Hogbin, said that while the group is making plans for a conversion, it is currently lobbying the FSA for a change in the committed link rules as soon as possible.
The IMA noted a number of groups, including the life operations of UBS and Merrill Lynch, have been granted waivers to the rules. When a waiver has been granted, it applies to individual funds and not across the life group's range of links.
The trade association has been pushing the regulator to address the eligibility issue for two years.
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