The Association of Investment Companies has suggested that investment companies should publish a primary, consistently calculated measure of gearing, expressed as a simple percentage.
In an AIC paper, Getting disclosures post RDR, the AIC recommends publishing historic gearing levels and a gearing range. It has suggested that investment companies should show in a table or graph the maximum/minimum levels of gearing a company has had over at least the past five years and should also provide a gearing range to set out the maximum and minimum levels that the company would expect to be geared in normal market conditions.
The AIC said this follows adviser feedback.
Ian Sayers, director general at the AIC, said: “Gearing is one of the defining characteristics of the investment company sector. Through initiatives like the AIC’s adviser training programme, today’s advisers seem much more comfortable with the concept of gearing. But they also need a clear picture of an individual company’s approach to gearing to help ensure it is appropriate for their clients’ risk profile.
“Advisers have told us that they want to know how highly geared a company is today, how gearing has been managed in the past, and where it may go to in the future. We believe these recommendations will help our members provide this information to advisers and investors in a more consistent and helpful way.”
