Interest in IMA mixed 0-35% sector questioned by firms

Fund managers are doubtful there will be much interest in joining the Investment Management Association’s (IMA’s) new mixed investment 0-35% shares sector due to the equity restrictions.

Gary Potter
Gary Potter

Last week, the IMA concluded its review into the managed sectors and aligned them with the Association of British Insurers’ (ABI) definitions.

The cautious sector will be called mixed investment 20-60% shares, the balanced sector will be called mixed investment 40-85% shares and the active managed sector will be called flexible investment. The percentages indicate funds’ minimum and maximum equity exposure.

The IMA has also created a new sector in line with the ABI’s mixed investment 0-35% shares sector.

Gary Potter, multi-manager at Thames River, has questioned whether managers will want to move their funds into the new sector. He says: “Some fund managers may tweak their allocations to stay in the mixed investment 20-60% shares sector as it is one of the fastest selling sectors.”

Potter says there are no plans to put Thames River’s £307m Distribution fund or its £261m Cautious Managed fund in the mixed investment 0-35% shares sector.

He says: “Our Distribution fund has held more than 35% equities since launch and we have no immediate plans to change the sector placement of the Cautious Managed fund as its investment philosophy does not fit the new sector.”

David Aird, managing director of Investec Asset Management, has ruled out including the £2bn Investec cautious managed fund in this new sector.

He says: “We believe the investment philosophy of our Cautious Managed fund fits the mixed investment 20-60% shares sector. The mixed investment 0-35% shares sector is too restrictive. In my experience, more money is invested in funds that are in middle-of-the-road risk buckets such as mixed investment 20-60% and mixed investment 40-85% shares rather than the outliers.”