In the absence of a regulatory benchmark on the presentation of past performance, the IMA has proposed asset managers use the existing retail share class track record for new RDR-ready share classes.
This means the impact of higher fees on existing share class performance will be shown in data presented for new RDR share classes.
The IMA said current ESMA rules leave the decision in the hands of individual asset managers, allowing them to choose how they present past performance for new share classes.
“It is important the industry adopts a consistent methodology for presenting the data. Using historic track records based on the higher fees of existing retail share classes is the most cautious approach to presenting the data to investors. It is typically more representative of what they will have experienced,” said Jane Lowe, the IMA’s director of markets.
“Using synthetic track records – those that exclude adviser charging – could mislead consumers into believing the industry has delivered better performance than it has.”
Back in November Morningstar concluded the same method to be the best one for investors after months of discussion and debate with interested parties.
At the time, Andy Pettit, director of data and research strategy, global funds, Morningstar UK, said: “For investors to fully benefit from the forthcoming regulatory changes and industry-wide consensus on the handling of performance history is urgently needed.
“If parties take different views inconsistent presentation of performance among fund houses and data providers may cause needless confusion.”
Thomson Reuters Lipper and the ABI are also to follow this approach, according to the IMA.
In conjunction with this issue, the IMA has decided to review the methodology for calculation of the IMA sectors average data in 2013.
