Savers now able to compare ETFs in the Investment Association sectors
From Monday 19 April, savers and financial advisers will be able to compare over 530 exchange traded funds (ETFs) from the UK’s largest ETF providers within the Investment Association’s (IA) sectors.
Eleven ETF providers – including: Amundi, BlackRock, Fidelity International, First Trust, Franklin Templeton, HSBC Asset Management, J.P. Morgan Asset Management, Legal & General Investment Management, Lyxor, Vanguard and XTrackers - have submitted their ETFs for inclusion, selecting the most relevant sectors for their funds.
The IA sectors, which are widely used by platforms and financial advisers, enable savers to easily navigate the open-ended fund market by dividing them into groups of similar funds. The addition of over 530 ETFs will increase the number of funds classified in the 52 sectors to over 4,100 funds.
The inclusion of ETFs in the IA sectors is also leading to wider changes. The Global Bonds sector, which would have increased in size by 50% (129 ETFs), will be replaced by 14 new bond sectors to be launched on Monday. This will ensure that savers can continue to easily compare bonds funds based on the following criteria: type of bond, credit type and currency focus. The Specialist and Global sectors will welcome the largest number of ETFs, with 79 and 71 ETFs joining each, respectively.
Jonathan Lipkin, Director for Policy, Strategy and Research at the Investment Association said:
“ETFs are a rapidly growing part of the UK fund market. Their inclusion in the IA sector framework recognises this, helping savers and their advisers to make comparisons and choose funds to meet their long-term financial goals.”
Notes to Editors:
Definitions of new bond sectors:
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).
EUR Government Bond
Funds which invest at least 80% of their assets in EUR denominated Government bonds (issued or explicitly guaranteed by European governments).
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, triple BBB minus or above corporate bond securities.
EUR Corporate Bond
Funds which invest at least 80% of their assets in EUR denominated, 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 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.
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.
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.
USD High Yield Bond
Funds which invest at least 80% of their assets in USD denominated, below BBB minus fixed income securities.
EUR High Yield Bond
Funds which invest at least 80% of their assets in EUR denominated, below BBB minus fixed income securities.
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.
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.
Notes to IA bond sectors
Additional points could be added within the text of the definitions, but the IA felt that it was clearer to include them as additional notes to the definitions:
- Credit ratings are measured by Standard & Poor’s or an equivalent external rating agency.
- Convertibles, preference shares and permanent interest-bearing shares (PIBs) are excluded from core holdings in bond sectors, with the exception of the Specialist Bond sector.
- Unrated bonds can only be included in the 80% core holdings for the Global Mixed Bond, USD and EUR Mixed Bond sectors, the Global High Yield Bond, USD and EUR High Yield sectors and the Specialist Bond sector.
- Funds in a sector labelled “Global” may choose to have their primary share class either as a GBP hedged share class or an unhedged share class because the sector is already diverse by bond type and currency exposure. However, to qualify for a sector labelled either “USD” or “EUR” the funds should primarily invest in assets denominated in US Dollar or Euros, not hedged back to that currency. The main driver of returns should be the underlying holdings not the currency of the primary share class. In the sectors labelled “USD” or “EUR”, GBP hedged funds have been moved to the Specialist Bond sector.
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
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.
