The names Cautious Managed and Balanced Managed may mislead investors as they do not accurately reflect the risk profiles of many funds in those sectors, warns HSBC Investments.
Dan Rudd, head of external distribution at HSBC Investments, says the cautious and balanced labels attached to many managed funds imply high diversification and relatively low risk. However, he says most funds carrying the labels tend to concentrate on UK equities and corporate bonds. The Investment Management Association (IMA) recommends funds hold up to 60% of their assets in equities to qualify for inclusion in the Cautious Managed sector and up to 85% in equities to qualify for the Balanced Managed sector. However, Rudd says many funds invest near the maximum permitted levels in equi...
To continue reading this article...
Join Professional Adviser for free
- Unlimited access to real-time news, industry insights and market intelligence
- Stay ahead of the curve with spotlights on emerging trends and technologies
- Receive breaking news stories straight to your inbox in the daily newsletters
- Make smart business decisions with the latest developments in regulation, investing retirement and protection
- Members-only access to the editor’s weekly Friday commentary
- Be the first to hear about our events and awards programmes