Investment Association calls for consumer views on the future of the UK Equity Income sector
Thursday 28 July 2016
The Investment Association has today signalled the importance of considering savers' needs by announcing consumer research to help decide the future of the UK Equity Income sector.
The research, which will be conducted by YouGov and include both consumers and Independent Financial Advisers (IFAs), comes after the Association invited its members to assess whether the current sector requirements are fit for purpose and put forward two options for change in April this year.
Industry feedback has shown that there continues to be a wide range of views on how the sector should be defined. There was a near fifty-fifty split between those who wanted to remain with the status quo, and those who believed that change was needed.
The consumer research will now ask investors and their advisers how they identify UK equity income funds and whether the current definition of the sector is helpful in supporting their objectives.
The results of the research will help the Sectors Committee to decide between the following three options:
- Option 1 - No change to the sector definition
- Option 2 - replace the current 110% hurdle with a requirement to generate a yield higher than the FTSE All Share over 3 year rolling periods. Retain the 90% yield requirement over 1 year. Demonstrate that an above market average income is an objective of the fund in product or client documents. Other sector criteria unchanged.
- Option 3 - require specific disclosure in relation to income (e.g. net yield, absolute net income generated over 5 years for £100 investment, income growth, total returns, volatility, whether the fund is structured to optimise dividend distribution (i.e. charge fees to capital and not income)). Accordingly, the yield hurdles in the current definition would be removed.
Galina Dimitrova, Director of Capital Markets, said:
“The fundamental role of our sectors is to help investors and their advisers better understand the wide range of products that the asset management industry has to offer.
“Following extensive consultation with our membership, we felt that it was essential to engage with consumers before making any decision about the future of the sector.
“Alongside the consumer research, we encourage all users of the sectors to share their views with the Investment Association in the coming weeks.”
To share your opinion on the UK Equity Income sector definition, please email [email protected] by 31 August 2016.
-ENDS-
For further information please contact:
John Kenchington
Director of Communications
[email protected]
M 07834 089 332
Linsey White
Head of Media Relations
[email protected]
T 020 7269 4635
M 07508 724 022
Alex Hogan
Press and Digital Media Officer
[email protected]
T 020 7269 4620
M 07508 724 066
About the Investment Association:
- The Investment Association is the trade body that represents UK investment managers who manage over £5.5 trillion on behalf of clients.
- 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.
For further information, please contact:
For media, to receive the full consultation document, please contact Helen Ayres
Helen Ayres, Communications Manager: [email protected]
T +44 (0)20 7269 4620; M +44 (0)7508 724 066
IA press office: [email protected]
About the Investment Association (IA):
- The IA champions UK asset management, supporting British savers, investors and businesses. Our 250 members manage £7.7 trillion of assets and the asset management industry supports 100,000 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 35% of all assets managed in Europe.
