Bringing you live news and features since 2013
Bringing you news, views and analysis since 2013

7811

IMA sector changes miss the point and do not go far enough, says Skandia

RELATED TOPICS​

The Investment Management Association’s changes to the names of its managed sectors do not go far enough and there is a danger that investors will continue to be confused by misleading fund names, says Skandia.

The renaming of the active, balanced and cautious sectors to Managed A, B and C is a step in the right direction but the real problem is individual fund names that use descriptors such as cautious, defensive or balanced.  Fund groups should be banned from using descriptions in their fund range that could obscure the amount of risk the investor is taking by investing in that fund.  Most consumers pay little attention to what sector their funds are in so it is the individual fund names where the risk of confusion lies.  
 
Research by Skandia shows that 81% of financial advisers expected funds in cautious sector to have a risk rating of 4 or below out of 10, with 10 being highest risk.  Yet analysis of the IMA cautious sector using Skandia’s Managed Fund Analyser shows that the vast majority of funds (71%) have a score of 5 or more and some of them have the highest risk scores of 9 or 10*.  Any of these funds that are labelled cautious or defensive could be misleading to investors.
 
Graham Bentley (pictured), head of UK proposition at Skandia, says: “Renaming the managed sectors from Active, Balanced and Cautious to A, B and C is quite frankly a farce.  Everyone knows what A, B and C stand for so will simply continue to use the old names verbally.  However, the whole exercise has missed the point which is that consumers are confused by individual fund names that imply a level of risk that does not match the real risk level of the fund.  As a result consumers will continue to be confused and investment sectors remain an industry enigma with little relevance to the consumers the industry is trying to serve.”

Latest News

Data provider Preqin has published its Deal Flow Monitor: Q1 2024 report, examining trends in..
Global index revenues increased 9.3 per cent in 2023, totalling a record USD5.8 billion, according..
Octopus Investments (Octopus) has announced it has launched a Natural Capital Strategy...

Related Articles

Trends
The trend to buyout among the UK’s smaller defined benefit (DB) schemes continues with a slew of new sub GBP100 million deals announced this month alone...
The trend to buyout among the UK’s smaller defined benefit (DB) schemes continues with a slew of new sub GBP100..
Different flavours
In what is believed to be the first survey of its kind in the UK market, Nedgroup Investments, the investment-led, multi-boutique global asset manager with over USD20 billion under management, recently undertook a survey with 204 UK investment professionals, seeking insights into their perceptions and attitudes towards boutique asset managers...
In what is believed to be the first survey of its kind in the UK market, Nedgroup Investments, the investment-led,..
UK map
UK local government pension schemes (LGPS) are leading the charge on investment in private markets issuing tenders set to be worth billions of pounds in the coming years...
UK local government pension schemes (LGPS) are leading the charge on investment in private markets issuing tenders set to be..
The trend of private equity firms acquiring businesses in the professional services sector continues with CVC Capital Partners eyeing a possible buyout of EY’s Italian consulting branch...
The trend of private equity firms acquiring businesses in the professional services sector continues with CVC Capital Partners eyeing a..
Subscribe to the Institutional Asset Manager newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by