Bringing you live news and features since 2006 

IMA sector changes miss the point and do not go far enough, says Skandia


The Investment Management Association’s changes to the names of its managed sectors do not go far enough and there is a danger that investors will continue to be confused by misleading fund names, says Skandia.

The renaming of the active, balanced and cautious sectors to Managed A, B and C is a step in the right direction but the real problem is individual fund names that use descriptors such as cautious, defensive or balanced.  Fund groups should be banned from using descriptions in their fund range that could obscure the amount of risk the investor is taking by investing in that fund.  Most consumers pay little attention to what sector their funds are in so it is the individual fund names where the risk of confusion lies.  
Research by Skandia shows that 81% of financial advisers expected funds in cautious sector to have a risk rating of 4 or below out of 10, with 10 being highest risk.  Yet analysis of the IMA cautious sector using Skandia’s Managed Fund Analyser shows that the vast majority of funds (71%) have a score of 5 or more and some of them have the highest risk scores of 9 or 10*.  Any of these funds that are labelled cautious or defensive could be misleading to investors.
Graham Bentley (pictured), head of UK proposition at Skandia, says: “Renaming the managed sectors from Active, Balanced and Cautious to A, B and C is quite frankly a farce.  Everyone knows what A, B and C stand for so will simply continue to use the old names verbally.  However, the whole exercise has missed the point which is that consumers are confused by individual fund names that imply a level of risk that does not match the real risk level of the fund.  As a result consumers will continue to be confused and investment sectors remain an industry enigma with little relevance to the consumers the industry is trying to serve.”

Latest News

ETF data consultant ETFGI reports that assets invested in the global ETF industry reached a new record of USD12.71 trillion..
Calastone has published an ETF white paper which examines several of the processes that take place across the lifecycle of..
Adapting product lines to fit into changing methodologies and meet shifting demand is essential to remaining relevant in the industry..
Investors urgently need greater access to diversified investment strategies aligned with the Paris Agreement on climate change if the world..

Related Articles

Taylor Krystkowiak, Themes ETFs
Themes ETFs opened its doors in December 2023, with an introductory suite of 11 ETFs – seven thematic and four...
Konrad Sippel, Solactive
At the end of March, financial index specialist, Solactive, published its 2024 annual report on future trends.  ...
Lorraine Sereyjol-Garros, BNP Paribas
Following changes to the French Monetary and Financial Code and of the French market authority AMF’s General Regulation, it is...
Ed Rosenberg, Texas Capital
Texas Capital Bank first opened its doors back in December 1998 and nowadays offers wealth-management services, as well as commercial,...
Subscribe to the ETF Express newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by