Acknowledging that the proposals, which were labelled “a farce” by Skandia on Friday, had faced “a torrent of criticism”, Saunders outlined the IMA’s thinking and challenged critics to develop their own proposals.
Addressing both the rationale behind the name changes and the criticism of those changes, Saunders said in a statement on the IMA website that anyone considering sector naming must consider three things: that sector names represent a way of grouping funds rather than conveying advice, that the existing groupings looked “broadly right” in terms of risk/reward, and that the funds “are for the most part sold with advice […] and advisers should be expected to do their homework”.
Saunders said that an approach which would describe the funds’ asset allocation – equivalent to that recently implemented by the Association of British Insurers – “would not only be too long but more to the point would simply have confused most investors”.
The IMA chief also dismissed the idea of simply using different adjectives as one that would run into “exactly the same problems” and said a description of investment objectives would be difficult in the absence of a benchmark.
“The proposed names – Managed A, Managed B, Managed C and a new Managed D – were deliberately concise and neutral. They would be augmented by a full and we hope clear description on the IMA web site when introduced at the start of July,” Saunders said.
“The proposals are now open for consultation for three weeks and we want to hear your views. But if you don’t like what is proposed, tell us what you would do instead.”
