The Investment Association will include exchange traded funds in its sectors from April 2021.
The IA announced today (December 18) that ETFs will be included from April 19 2021, more than a year after original deadline passed.
The delay was due to the trade body receiving applications from more than 500 ETFs, so was unable to complete the project in time.
The inclusion of ETFs will coincide with the division of the IA Global Bonds sector, which will be split into 14 new sectors.
This forms part of the IA’s review of its sectors to ensure they remain relevant and fit for purpose for investors, and to accommodate the 500 ETFs set to join.
Earlier this year, the IA proposed dividing the Global Bond sector, which is made up of 193 funds, based on type of bond, credit type and currency focus.
This proposal was put forward because the number of ETFs looking to join the group would have seen its size increase by 50 per cent.
ETFs joining the IA sectors have nominated the most appropriate sector for each fund.
Once completed, the IA’s sectors will contain more than 4,000 funds, divided across 52 sectors.
Jonathan Lipkin, director for policy, strategy and research at the IA, said: “We continually monitor the fund market to ensure all IA sectors reflect the wide range of products the investment management industry has to offer UK savers.
“Including ETFs within the IA sectors will help investors more easily find and compare the full range of investment funds available to them.
“As part of the process to include ETFs, we are also reviewing the overall structure of the IA sectors. The division of the Global Bonds sector from April next year will ensure savers are better able to make like-for-like comparisons when choosing their investments.”
ETFs have grown in popularity over the past decade. Most, but not all, of these products are passive funds that track an index.
Only physical ETFs, that is those which actually own the underlying assets they are tracking, are eligible for inclusion.
Synthetic ETFs, which do not own the underlying asset but do offer investors the returns available from the specified market, are not eligible.
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