Some fund managers at IMA member firms are invested entirely in structured products despite criticism of the investments from its chief executive Richard Saunders this week.
Statistics on IMA member funds, seen by IFAonline.co.uk, show that, of the 208 funds with a structured products allocation, five have 100%, nine have above 50% and 33 have more than a 20% allocation.
In addition, Blue Sky Asset Management (BSAM) today describe Saunder’s comments, in which he said some structured product providers’ claims about returns “should not be taken at face value”, as “simplistic and misguided”.
On Tuesday, the IMA argued it is difficult to assess the accuracy of product literature because structured products' promoters are not obligated to report performance.
He contrasted the performance of some Guaranteed Equity Bonds with index trackers and claimed investors “may not realise how much return they are giving up in order to be protected against what is a rare event”.
It sparked stinging criticism from some providers, who claimed Richard Saunders and the IMA may simply be unsettled by the amount of investor cash leaving mutual funds and finding its way into structured investments.
But Blue Sky says that, in the current challenging market conditions, industry professionals need to meet the needs of investors constructively and collectively, not “focus on dogma and scoring industry points”.
Chris Taylor, chief executive of BSAM, says: “It is interesting to see the IMA make these comments, but we do unfortunately feel that they have missed the broad point.
“We also question the objective behind the [comments], as they do not appear to serve either investors' best interests, or indeed IMA member firms themselves.”
He adds: “Regardless of industry commentators, investors are demonstrating what they find important and are focusing on in the current environment, and two factors stand out.
“Firstly, with slowing economic growth and increased market volatility, investors want to control portfolio risk – ideally not just defining or reducing it but removing it.
“Secondly, with lower and slower stock market growth a likelihood in the foreseeable future, investors want to enhance future returns where possible.”
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