Our sectors are run by IA staff and overseen by our Sectors Committee.
The Sectors Committee oversees the entire sector classification scheme. It guides fund providers and managers, data companies and others on sector-related issues. The Committee is made up of IA members with a range of industry experience, IA staff, and third-party data companies. The committee meets regularly to review issues relating to the sectors.
As far as possible, the Sectors Committee aims to ensure:
uniformity – in how data is prepared and presented, recognising data companies are not bound by the committee’s guidance and may choose to present the data differently
continuity – because frequent change is confusing for investors
clarity – how data is interpreted ultimately determines its effectiveness
independence – so comparisons aren’t based on commercial considerations.
The monitoring process involves analysing the portfolio holdings of a fund to check each fund meets the sector parameters and so can be compared with other funds in that sector. To do this, we’ve appointed an independent third party, Morningstar, to collect data directly from the fund managers, analyse it, and report back on funds which breach sector criteria. Additional data on the economic exposure of a fund may be collected, as necessary.
Based on the monthly reports prepared and submitted by Morningstar, the IA will remove funds that do not meet sector parameters. However, there is a reporting delay and at times follow-up and clarifications may show a fund was compliant or cause it to become compliant. Sector monitoring does not provide a real-time verification of compliance, nor does a breach of sector criteria always lead to removal.