More than one-tenth of the funds in the Investment Management Association (IMA) sectors breached the sector definitions last year, although a majority corrected the breaches soon after they were discovered.
The IMA revealed the statistics in an update on its fund sector review, its largest in 10 years.
Jane Lowe, the director of markets at the IMA, says 234 funds breached the rules as revealed by their monthly data submissions. The sectors contained 2,409 funds at the end of August. The IMA writes to inform companies of breaches and removes funds from sectors after three monthly breaches in a row. (article continues below)
The association is revising the principles by which its sectors are defined and funds included and excluded, particularly given the difficulty of classifying funds that use derivatives.
As part of its review, the association has asked members which share classes they should use to monitor performance, particularly given the expected proliferation in share classes after the retail distribution review.
It is also helping the Association of British Insurers (ABI) redefine the ABI’s managed sectors, which it confirms could affect the IMA’s assessment of its own managed peer groups.
This precedes a review of the UK All Companies sector, the IMA’s largest peer group, which contains a disparate range of funds including all-cap, large-cap and mid-cap vehicles, and several funds with special aims and strategies.
The IMA is also considering altering its website to help users search within its sectors, especially within peer groups which are large and diverse.