ETFs to join IA sectors in April 2021
Friday 18 December 2020
Exchange traded funds (ETFs) will be included in the Investment Association’s (IA) sectors from 19 April 2021. Their inclusion will coincide with the division of the IA Global Bonds sector, which will be split into 14 new sectors.
The creation of the new bond sectors is part of the IA’s review of its sectors to ensure they remain relevant and fit for purpose for investors, and to accommodate the over 500 ETFs set to join the sectors. The IA consulted on splitting the Global Bonds sector based on type of bond, credit type and currency focus earlier this year, following confirmation in May 2019 that ETFs would be joining the IA sectors. The high level of interest from ETFs looking to join the sectors meant that if unchanged, the number of funds in the Global Bonds sector would increase by more than 50%.
ETFs joining the IA sectors have nominated the most appropriate sector for each fund. Once completed, the IA’s sectors will contain over 4000 funds, divided across 52 sectors.
Jonathan Lipkin, Director for Policy, Strategy and Research at the Investment Association, 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.”
ENDS
Notes to Editors:
- For more information on the IA sectors, click here.
- Only physical replication ETFs are eligible for inclusion in the IA sectors.
- The following is a list of the new sectors and their definitions:
- USD Government Bond
- Funds which invest at least 80% of their assets in USD denominated Government bonds (issued or explicitly guaranteed by the US government). (21 funds)
- EUR Government Bond
- Funds which invest at least 80% of their assets in EUR denominated Government bonds (issued or explicitly guaranteed by European governments). (29 funds)
- Global Government Bond
- Funds which invest at least 80% of their assets in a diversified portfolio of Government backed securities from around the world in a variety of currencies. (16 funds)
- Global Inflation Linked Bond
- Funds which invest at least 80% of their assets in a diversified portfolio of inflation linked bond securities from around the world in a variety of issuers and currencies. (15 funds)
- USD Corporate Bond
- Funds which invest at least 80% of their assets in US Dollar denominated, triple BBB minus or above corporate bond securities. (17 funds)
- EUR Corporate Bond
- Funds which invest at least 80% of their assets in EUR denominated, triple BBB minus or above corporate bond securities. (27 funds)
- Global Corporate Bond
- Funds which invest at least 80% of their assets in a diversified portfolio of triple BBB minus or above corporate bond securities from around the world in a variety of currencies. (17 funds)
- USD Mixed Bond
- Funds which invest at least 80% of their assets in USD denominated bond securities. A fund may invest in a broad mix of USD denominated bonds across the bond credit and type spectrum. This may involve a significant degree of flexibility. At any point in time, the asset allocation could theoretically place the fund in one of the other USD bond sectors. The fund will remain in this sector on these occasions since it is the Manager’s stated intention to retain the right to invest across the USD bond credit and type spectrum. (8 funds)
- EUR Mixed Bond
- Funds which invest at least 80% of their assets in EUR denominated bond securities. A fund may invest in a broad mix of EUR denominated bonds across the bond credit and type spectrum. This may involve a significant degree of flexibility. At any point in time, the asset allocation could theoretically place the fund in one of the other EUR bond sectors. The fund will remain in this sector on these occasions since it is the Manager’s stated intention to retain the right to invest across the EUR bond credit and type spectrum. (11 funds)
- Global Mixed Bond
- Funds which invest at least 80% of their assets in bond securities. A fund may invest in a broad mix of bonds across the bond credit, type and/or currency spectrum. This may involve a significant degree of flexibility. At any point in time, the asset allocation could theoretically place the fund in one of the other Global bond sectors or the USD or EUR bond sectors. The fund will remain in this sector on these occasions since it is the Manager’s stated intention to retain the right to invest across the bond credit, type and currency. (42 funds)
- USD High Yield Bond
- Funds which invest at least 80% of their assets in USD denominated, below BBB minus fixed income securities. (19 funds)
- EUR High Yield Bond
- Funds which invest at least 80% of their assets in EUR denominated, below BBB minus fixed income securities. (12 funds)
- Global High Yield Bond
- Funds which invest at least 80% of their assets in a diversified portfolio of below BBB minus fixed income securities from around the world in a variety of issuers and currencies. (17 funds)
- Specialist Bond
- Funds that invest at least 80% in bond securities but which do not qualify for inclusion in any of the other IA Bond sectors. (30 funds)
For further information, please contact:
Katie Martin, Head of Communications: [email protected]
T: +44 (0)20 7269 4655
Helen Ayres, Communications Manager: [email protected]
T: +44 (0)20 7269 4620
David Parton, Communications Executive: [email protected]
T: +44 (0)20 7269 4625
IA press office: [email protected]
T: 020 7269 4696
About the Investment Association (IA):
- The IA champions UK investment management, supporting British savers, investors and businesses. Our 250 members manage £8.5 trillion of assets and the investment management industry supports 113,000 jobs across the UK.
- Our mission is to make investment better. Better for clients, so they achieve their financial goals. Better for companies, so they get the capital they need to grow. And better for the economy, so everyone prospers.
- Our purpose is to ensure investment managers are in the best possible position to:
- Build people’s resilience to financial adversity
- Help people achieve their financial aspirations
- Enable people to maintain a decent standard of living as they grow older
- Contribute to economic growth through the efficient allocation of capital.
- The money our members manage is in a wide variety of investment vehicles including authorised investment funds, pension funds and stocks and shares ISAs.
- The UK is the second largest investment management centre in the world, after the US and manages over a third (37%) of all assets managed in Europe.
