So-called cautious and balanced funds 'mislead investors'

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...