Press Release
30 November 2011
IMA AND ABI HARMONISE MANAGED/MIXED INVESTMENT SECTORS TO BENEFIT CONSUMERS
The IMA and ABI have today announced that they are harmonising their Managed/Mixed Investment sectors to provide greater clarity to consumers, creating consistency and comparability across insurance and investment funds.
Both the IMA and ABI conducted qualitative and quantitative consumer research with further consultation with IFAs, funds of funds managers, platforms and other market participants. The IMA’s consumer research* found that when presented with sector definitions, investors focused on the percentage exposure to asset classes. The majority of UK active investors said the sector name was not the most important factor in deciding what to invest in, but a quarter (28%) have used the sectors to help them reach their final investment decision, so the sector names need to act as a useful signpost.
The ABI’s consumer research** showed that customers want jargon-free names for fund sectors to give them simple information about the minimum and maximum exposure to shares. The research found the Mixed Investment format was significantly less likely to lead to consumers misinterpreting the type of funds they choose to invest in.
As a result the IMA and ABI have agreed upon a single set of sector names and definitions:
|
NEW IMA & ABI NAMES |
OLD IMA NAMES |
OLD ABI NAMES |
|
Mixed Investment 0-35% Shares |
N/A |
Mixed Investment 0-35% Shares |
|
Mixed Investment 20-60% Shares |
Cautious Managed |
Mixed Investment 20-60% Shares |
|
Mixed Investment 40-85% Shares |
Balanced Managed |
Mixed Investment 40-85% Shares |
|
Flexible Investment |
Active Managed |
Mixed Investment 60%-100% Shares |
The sector names indicate the mixed asset make-up of the funds and the maximum and minimum amount of shares permitted. The definitions*** set out the permitted investments in each sector, including the percentage exposure to equities, fixed income and cash investments and currency requirements. Although the definitions have changed, many of the limits on asset class exposure remain broadly consistent with both the ABI and IMA’s previous limits.
The Flexible Investment sector (formerly the IMA Active Managed Sector and the ABI Mixed Investment 60%-100% Shares Sector) permits the fund manager to exercise significant flexibility over asset allocation and does not have a minimum or maximum for equities.
The changes will come into effect from 1 January 2012. Firms will have until the end of April 2012 to make the necessary changes to their funds.
Both the IMA and ABI will issue guidance to their members on the new sector names and definitions.
Maggie Craig, Director of Financial Conduct Regulation, ABI commented:
“Alignment of the IMA and ABI mixed investment sectors provides greater clarity for users, particularly consumers. The sector names will give consumers a better understanding of how their fund might be invested and dropping terms such as ‘cautious’ should encourage the industry to carefully consider the use of such terms in the future.”
Jane Lowe, Director of Markets of the IMA, commented:
“We are delighted that our conversations with the ABI have resulted in such a fruitful collaboration, which will create consistency across these sectors.
“The four mixed investment sectors clearly communicate a spectrum of options available to consumers. The names provide an at-a-glance look at the funds’ exposure to shares, while investors can get further detail on what they are investing in by studying the definitions.”
-ENDS-
Notes for Editors
1. Enquiries to:
ABI
| Liz Forster | 020 7216 7444 | Mobile: 07717 578586 |
| Malcolm Tarling | 020 7216 7410 | Mobile: 07776 147667 |
| Linsey White | 020 7216 7415 | Mobile: 07885 998011 |
| Sarah Bailey | 020 7216 7514 | Mobile: 07725 372636 |
| Adeola Ajayi | 020 7216 7521 | Mobile: 07725 245284 |
IMA
| Clare Murphy-McGreevey | 020 7831 0898 | Mobile: 07843 517618 |
| Christina Bridge | 020 7831 0898 |
Email: press@investmentuk.org
2. *The IMA conducted qualitative research and quantitative research. The quantitative research surveyed 897 UK active investors on how they decide to invest in funds. Investors consider many things when investing in a fund: whilst the sector name is not the most important factor for the majority of investors, a quarter (28%) of investors in funds have used the sectors to help them reach their final investment decision. Of those investors, 45% said that the sector name was important to them.
Investors were presented with the names and definitions of different sectors. Looking at the IMA Cautious Managed Sector, over 50% of respondents said that they found it most informative when the following words were used:
- maximum – highlighted by 57% of respondents
- equity – highlighted 63% of respondents
- exposure - highlighted by 64% of respondents
- restricted – highlighted by 63% of respondents
- to 60% - highlighted by 71% of respondents
3. **The ABI’s consumer research can be found here: Fund Sector Consumer Research
4. ***A summary and explanation of the harmonisation of the sectors, which includes definitions, can be found here:
5. The IMA is the trade body for the UK's £4 trillion asset management industry. The money its members manage is in a wide variety of investment vehicles including authorised investment funds, pension funds and stocks and shares ISAs. Our purpose is to support and promote a commercially successful and growing UK investment management industry as we seek to improve the financial outcomes for customers - savers and investors. www.investmentuk.org
6. The ABI is the voice of the UK’s insurance, investment and long-term savings industry. It has over 300 members, which together account for around 90% of premiums in the UK domestic market.
The ABI’s role is to:
- Be the voice of the UK insurance industry, leading debate and speaking up for insurers.
- Represent the UK insurance industry to government, regulators and policy makers in the UK, EU and internationally, driving effective public policy and regulation.
- Advocate high standards of customer service within the industry and provide useful information to the public about insurance.
- Promote the benefits of insurance to the government, regulators, policy makers and the public.
The UK insurance industry is the third largest in the world and the largest in Europe. It is a vital part of the UK economy, managing investments amounting to 26% of the UK’s net worth and contributing the fourth highest corporation tax of any sector. Employing over 290,000 people in the UK alone, the insurance industry is also one of this country’s major exporters, with 28% of its net premium income coming from overseas business.
Insurance and businesses protect themselves against the everyday risks they face, enabling people to own their own homes, travel overseas, provide for a financially secure future and run businesses. Insurance underpins a healthy and prosperous society, enabling businesses and individuals to thrive, safe in the knowledge that problems can be handled and risks carefully managed. Every day, our members pay out £147 million in benefits to pensioners and long-term savers as well as £60 million in general insurance claims.
7. An ISDN line is available for broadcasts.
8. More news and information from the ABI is available on our web site, www.abi.org.uk.