PA ANALYSIS: IMA should turn attention to web-based fund analysis

The IMA needs web-based fund analysis to classify funds by what they do not what they are called.


There is no simple answer and the Investment Management Association is in an impossible position.

It is poorly resourced for the job it has to do and relies on individuals from its member firms to voluntarily give up their time to run its committees in tandem with doing their day job. Using input and comment from a wide number of firms and interests, these individuals will, sub-consciously or not, represent the interests of their own firm on the committee and when such a diverse range of opinions are given, making a decision that will be accepted across the industry is not going to happen.

The review of the Managed sectors is a case in point. The industry clamoured for change; the IMA spoke to the industry it represents and gave its suggestion; the IMA then got roundly beaten for what it came up with.

A, B, C, D…

Communication isn’t one of the IMA’s greatest strengths, as evidenced by chief executive Richard Saunders’ clumsy attempt to explain the thinking behind the A, B and C proposals. His suggestions verged on insulting advisers by saying they “should be expected to do their homework” – what does he think they do at the moment?

But the slanging match between the IMA and everyone else needs to end. Everyone – myself and the rest of the media included – needs to take a breath, come at this from the point of view of the end investor and not a selfish vested interest, and go back to basics. We all need to know what role is played through the whole decision-making process, from the individual client to the manager behind the fund.

  • The IMA’s sectors are designed to point people in the right direction when it comes to choosing a fund, not to give investors chapter and verse on what each fund does.
  • The advisers’ role is to understand what the funds do and how they do it irrespective of what it is called. A naming convention should not and does not drive the decision-making process for the quality intermediaries in the UK.
  • Funds should be firstly described according to what they do not how they do it and should be  kept as simple to understand as possible. Grouping funds together and calling them ‘Managed Mixed Investment 0-35% Shares’ (ABI) or ‘Mixed investment – maximum 35% risk assets’ (Fidelity) are ill-thought out themselves.

Sectors called Managed A, B, C and D may not be perfect but it is better than having funds that are not cautious (or managed) in a sector called Cautious Managed.

The next stage of the IMA’s sector classification should be to “point people in the right direction” by helping investors analyse funds by what they do; stage two is to help them look at how they do it on a potential risk/potential return basis. This can most effectively and efficiently be done with a user-friendly, interactive, web-based system of a piece with those already available from Morningstar, Financial Express, Reuters and advisers up and down the country..

The IMA’s consultation process is still open so if advisers can take time out from doing their homework, do get in touch with Nicola Kembey, head of sectors, by email at


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