ima reveals new boundaries abs ret funds

The IMA has finally revealed the outcome of its Absolute Return Sector review which has been ongoing since the start of last year, with outcomes falling short of what many had hoped for.

ima reveals new boundaries abs ret funds


Under the conclusions of the review, the asset management trade body has changed the name of the sector to the “Targeted Absolute Return Sector” and removed the positive 12-month rolling returns stipulation.

In its watered down conditions the IMA said all funds in the sector must “at a minimum” target positive returns in any market conditions.
It is at the discretion of the asset manager if they choose to set up more demanding targets and whatever they decide must be specified explicitly.

Funds in the sector must also state a timeframe to meet their target, which cannot be longer than three years.

Daniel Godfrey, IMA chief executive, said: “One key purpose of the Absolute Return Sector review was to make sure that consumers do not inadvertently perceive there to be some implicit guarantee of positive returns due to the name of the sector. Adding the ‘targeted’ description to the sector name fulfils this purpose.

We will continue to keep a close eye on the sector to see whether sub-groups could be created to further refine the value of our sector data for users. We will also keep a close eye on performance and, should it become necessary, set performance criteria, which could lead to a fund’s expulsion from the sector on performance grounds. The monitoring we have announced today will be an important tool in this regard.

The IMA said it will publish data illustrating the consistency with which each fund has produced positive returns over rolling one-year periods and is also set to create an online fund filtering tool for launch in Q3 to help investors compare funds.

Fund providers have until 20 May 2013 to decide if they want to comply with the new sector terms or find a home in one of the other sectors instead.

Monitoring of the Targeted Absolute Return Sector, its classification and its new name will kick in as of 1 June 2013.



Latest Stories