10
Sep
2020

IA launches consultation on Global Bonds sector

The Investment Association (IA) has today launched a consultation into the future of its Global Bonds sector.

The IA’s 37 sectors enable savers to easily navigate the open-ended fund market by dividing them into groups of similar funds. The consultation proposes dividing the 193-strong Global Bonds sector into ten new sectors* so savers and their advisers can better compare global bond funds based on the following criteria:

  • Type of bond e.g. government bond, corporate bond.
  • Credit type e.g. investment grade, high yield, mixed.
  • Currency focus e.g. USD, Euro or multi-currency.

The consultation forms part of the IA’s wider work to accommodate exchange-traded funds (ETFs) into its sectors which were given the green light to join last year. Given the high number of ETFs looking to join the Global Bonds sector, which would have seen it increase by 50%, the IA has instead proposed the creation of ten new, more targeted sectors.

Jonathan Lipkin, Director for Policy, Strategy & Research at the Investment Association, said:

“We are continually monitoring the fund market to ensure that all of the IA sectors reflect the wide range of products the investment management industry has to offer UK savers. The division of the Global Bonds sector will better enable the inclusion of ETFs and make it easier for savers to make like-for-like comparisons.”

The consultation will close on 10th October 2020. Responses are welcomed from all stakeholders interested in the distribution of funds in the UK, and in particular consumer representatives, distributors, advisers and fund selectors are invited to engage in this process alongside IA member firms.

Notes to Editors

To view the full consultation document: click here

*The following is a list of new sectors and their proposed definitions.

  • US Government Bond: Funds which invest at least 80% of their assets in US Government backed securities.
  • European Government Bond: Funds which invest at least 80% of their assets in European Government backed securities.
  • 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.
  • 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.
  • USD Corporate Bond: Funds which invest at least 80% of their assets in US Dollar denominated (or hedged back to US Dollar), triple BBB minus or above corporate bond securities.
  • EUR Corporate Bond: Funds which invest at least 80% of their assets in Euro denominated (or hedged back to Euro), triple BBB minus or above corporate bond securities.
  • 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.
  • USD Strategic Bond: Funds which invest at least 80% of their assets in US Dollar denominated (or hedged back to US Dollar) bond securities. At any point in time the asset allocation of these funds could theoretically place the fund in one of the other USD bond sectors (USD Corporate or USD Government) or Global High Yield or Global Inflation Linked (if still invested at least 80% in USD bond securities). 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.
  • EUR Strategic Bond: Funds which invest at least 80% of their assets in EUR denominated (or hedged back to EUR) bond securities. At any point in time the asset allocation of these funds could theoretically place the fund in one of the other EUR bond sectors (EUR Corporate or EUR Government) or Global High Yield or Global Inflation Linked (if still invested at least 80% in EUR bond securities). 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.
  • Global Strategic Bond: Funds which invest at least 80% of their assets in bond securities. At any point in time the asset allocation of these funds could theoretically place the fund in one of the other Global bond sectors, including any of the USD or EUR 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 spectrum.
  • Global High Yield Bond: Funds which invest at least 80% of their assets in a diversified portfolio of below BBB minus bond securities from around the world in a variety of issuers and currencies.
  • 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.

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 £7.7 trillion of assets and the investment management industry supports 115,000 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 37% of all assets managed in Europe.