Investments  

Standard Life’s Moore hits out at IA sector critics

Standard Life’s Moore hits out at IA sector critics

Thomas Moore, the manager of Standard Life Investment’s £1.2bn UK Equity Income fund, said fund managers should focus on achieving investment sector requirements, rather than complain about them.

His comments come as various funds – including Rathbone Income, Montanaro UK Income and Webb Capital Smaller Companies Income & Growth – were kicked out of the UK Equity Income sector for not meeting the criteria set out by the Investment Association.

The move to cull funds from the sector was met with criticism by Evenlode fund manager Hugh Yarrow who called the rules “arbitrary” after his £524m Income fund was thrown out of the group.

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In April, the Investment Association launched a consultation, which is currently underway, that could pave the way for an overhaul of the requirements for funds in the UK Equity Income sector.

However, speaking to FTAdviser, Mr Moore – who also runs Standard Life’s £174m Equity Income trust – said he is “perfectly happy” with the status quo.

He said: “We don’t understand the urgent need for a change in the sector on the income requirements.

“I think the rules were set and well understood by every company that has funds in the UK equity income sector.

“For me, it is about getting on the front foot and making sure we achieve sector requirements, not complaining about them.”

Mr Moore pointed to the three-year average in income generation, which means fund managers don’t have to hit 110 per cent of the UK market dividend yield every year.

He said “any rule is arbitrary”, adding: “Those fund managers who are implying the requirements are unfair signed up to the rules when they entered the sector.

“The other implication is: If you think the rules need to be changed then perhaps you’re not willing to produce what your clients expect you to produce?”

Mr Moore said his focus is on companies with growing dividend streams and “solid fundamentals”.

“This means I’m not lying in bed worrying about whether these companies will end up paying their dividends.”

He added: “Clients are in urgent need of income in this environment and I don’t think it’s our place to say clients are wrong to demand a premium yield; products should be able to meet that need.”

Gordon Bowden, director and financial Planner at Quainton Hills Financial Planning, agreed that fund managers should focus on achieving sector requirements rather than moaning.

He said: “It is what investors would expect and part of the criteria that advisers use to evaluate a fund. I also believe it is fair for funds to be pushed out of the sector if they do not meet requirements.

“However there is no problem with managers lobbying the IA to amend sector requirements and possibly lobbying the IA to introduce different sector that are more relevant to today’s investors.”

katherine.denham@ft.com