The IMA has been questioning fund groups over their exposure to currencies in their fixed income funds, with the view to tightening sector definitions.
Kames Capital's Stephen Snowden (pictured) said the trade body has been talking to fund groups about their exposure to currency markets, after learning some fund managers in the Sterling Corporate Bond sector are using currency bets as a dominant part of their portfolios.
Under the IMA guidelines the sector definition says funds are required to invest at least 80% of their assets in sterling denominated assets (or hedge 80% of the portfolio back into sterling) with a maximum of 20% of portfolios exposed to bonds denominated in overseas currencies.
However, Snowden claimed a number of funds are making currency bets a more active part of the portfolio.
"Investors are not buying sterling corporate bond funds for currency management," said Snowden.
"However, some of these funds are bringing a multi-asset approach to a plain vanilla asset class. People are finding they have big exposure to foreign currencies, equities and derivatives."
In April, the IMA said it was consulting members over changes to the fixed income sectors, including limiting exposure to asset backed securities and reviewing the classification of short-term bonds as cash.
The IMA said a wider review of the fixed income sector was still ongoing.
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