The IMA is considering creating a new ‘Absolute Return' fund sector.
Currently under member consultation, a decision on the new sector classification is expected soon.
“It is in a closed discussion and no conclusion has been reached yet on whether or not there will be a new sector,” an IMA spokesperson says. “It the final consultation and we expect to release the decision in a few weeks.”
The IMA is responding to a number of new fund launches in the absolute return space in recent months.
City Financial managing director Andrew Williams would welcome the new sector.
“A significant number of funds have been launched or restructured such that they do not comfortably fit in existing IMA sectors,” he says.
“An Absolute Return sector is an important and necessary development and should be introduced soon for those funds that operate on a ‘cash+’ investment objective.
“If the IMA is able to act quickly on sector reviews, the launch by other organisations of their own ‘sectors’ may slow or even cease completely and thus avoid the confusion that results from sector construction by different groups.”
Williams says City Financial would like to see its John Husselbee managed Diversified Absolute Return fund added to the IMA Absolute Return sector when it is introduced.
At its simplest, ‘absolute return’ means the ability to generate a positive return in any 12 month period, regardless of the market conditions. Derivatives and other instruments can be used by absolute return managers to help boost performance.
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