The Investment Management Association (IMA) and the Association Of British Insurers (ABI) will harmonise their Managed/Mixed Investment sectors.
In May, the IMA proposed renaming its Active, Balanced and Cautious sectors as Managed A, B and C, but delayed the changes and launched a consultation after meeting resistance from the industry.
The trade associations say the new changes will provide consumers with greater clarity, while improving consistency and comparability across insurance and investment funds.
Under the new regime, two of the IMA’s Managed sectors will assume the names of their ABI counterparts. Cautious Managed will become Mixed Investment 20-60% Shares, while Balance Managed will be Mixed Investment 40-85% Shares.
The IMA Active Managed and the ABI Mixed Investment 60%-100% Shares will fall under the new Flexible Investment label. The Mixed Investment 0-35% Shares sector, which has no IMA equivalent, will remain.
The definitions are designed to make clear the permitted investments in each sector, such as their exposure to equities, fixed income and cash investments and currency requirements.
Jane Lowe, the director of markets at the IMA, says: “The four mixed investment sectors clearly communicate a spectrum of options available to consumers.”
“The names provide an at-a-glance look at the funds’ exposure to shares, while investors can get further detail on what they are investing in by studying the definitions.”
Maggie Craig, the director of financial conduct regulation at the ABI, adds: “The sector names will give consumers a better understanding of how their fund might be invested and dropping terms such as ‘cautious’ should encourage the industry to carefully consider the use of such terms in the future.”
The changes will come into force on January 1, 2012, with firms having until the end of April to make the necessary changes to their products.
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