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Asset management houses remain divided over the structure of the IMA Absolute Return sector, in spite of the industry body's review a month ago.

Several fund managers suggested banding the sector by standard deviation over three years, giving investors a guide to absolute volatility, while others rejected the suggestion as "dangerous" and advocated splitting up the sector by investment process.

The news comes as more fund management groups consider stepping into the absolute return space.

GLG Partners, the European hedge fund specialist, is planning on bringing more of its institutional products to the retail space, and Robin Minter-Kemp, managing director of Cazenove Capital, said he expected to see more launches by UK-based groups this year.

Marlborough Fund Managers wrote to the IMA in April mooting the idea of introducing volatility bands to the sector.

Stacey Ash, co-manager of the £20.5m Marlborough ETF Absolute Return fund, said: "You could split it into groups that have a standard deviation target of 0-5 per cent, or 5-10 per cent, or 15-20 per cent – whatever it might be.

"Then people will know what the potential volatilities are. Some absolute return funds have done really well, some have been down the middle like ourselves and some have had a torrid time."

Tam McVie, investment director at Standard Life Investments, agreed the IMA sector was an "absolute hotch-potch" of funds, but said the absence of three-year track records for many funds, coupled with similar volatility profiles, would make banding by standard deviation difficult.

Mr McVie said he would like to see the sector sorted according to underlying investment strategy along the lines of the hedge fund universe – for example, with long/short equity funds in a different band to fixed income funds.

"Advisers need to know about volatility, but they also need to be comfortable with the fund's underlying investment process, so they can gauge how it fits in with their clients' goals."

Mr Minter-Kemp said organising the sector by absolute volatility would be misleading to investors, as managers running long and short positions would still be exposed to market volatility.

"It's easy to say I see myself in the volatility range of 10-15 per cent, but if the market goes up to 20 per cent, there nothing you can do about it," he said.

"To try and separate the funds by absolute volatility is bordering on dangerous because the fund manager has no control over where the volatility will go."

A spokesperson for the IMA said there had been no consensus for a change to the sector during the last consultation in April, but said members would be consulted again in a year's time.