InvestmentsJun 27 2016

IA launches new sector for outcome-focused funds

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IA launches new sector for outcome-focused funds

The Investment Association (IA) is to create a new Volatility Managed sector, Investment Adviser can reveal, concluding a 16-month consultation designed to resolve the growing number of outcome-focused funds sitting in its Unclassified grouping.

The review, which began in February 2015, had mooted a complete overhaul of the IA classification scheme, but the trade body has instead opted for the establishment of a single new sector.

The Volatility Managed sector, housing funds that “target a client’s attitude to risk set out in terms of volatility”, will go live in November.

The IA said it could feasibly include as many as 120 of the funds which currently sit in the Unclassified sector.

The trade body has now called on firms to put forward funds for inclusion.

Sector membership will require funds to pass a “high hurdle of transparency”, including the obligation to provide advisers with information on how volatility is measured.

The launch of the sector is the first step in a drive to better categorise outcome-focused funds, the IA added, with further work on the sector possible once its initial population had been established.

Galina Dimitrova, director of capital markets at the IA, said: “The launch of the Volatility Managed sector is an important step to grouping more outcome-focused funds together.”

Meanwhile, the creation of another new sector for multi-asset income funds is also being considered, but requires “further consultation”, the trade body said.