The Investment Association consults on sector classfication of outcome-focused funds
The Investment Association has today launched a consultation on how to accommodate the increasing number of outcome-focused funds. While still comparatively small in asset terms (30bn; 3.3% of total industry funds under management), there are now nearly 200 funds with an outcome focus in the Unclassified sector.
The Association has put forward two options for change:
1. To set up a new sector for outcome-focused funds which would sit alongside the existing Investment Association Mixed Investment sectors on the basis that both types of funds vary their asset allocation. However, the distinction would be that the Mixed Investment sectors have specified asset parameters whereas the outcome-focused funds do not.
2. To undergo a major reorganisation of the sector classification scheme and create two distinct areas: one for asset-based funds and one for outcome-focused funds. This option would also include the creation of a filtering tool for outcome-focused funds which would allow users to select certain criteria in order to view funds that are more alike – a similar tool is already available for targeted absolute return funds.
Jonathan Lipkin, Director of Public Policy at The Investment Association, said:
“The investment fund universe is changing rapidly with a significant rise in the number of outcome-focused funds. In looking at how to accommodate this trend, we have a number of options and an opportunity to take a fresh look at the overall shape of the sectors framework. We welcome input from all interested parties as we consider how to move forward.”
All interested parties are invited to take part in the consultation and respond by 2 April 2015. Separately, The Investment Association has been running independent research with financial advisers, as the main users of the sectors, to capture their views.
The full consultation paper detailing the background of the consultation and the options is available to download here.
