IMA overhauls Absolute Return sector

The IMA seem to have escaped receiving any blame in relation to the Arch Cru funds which were classified as cautious when in reality they turned out to be high risk.

T Murphy

ok then i blame the IMA ! Targeted ?

I disagree completely with this renaming. Absolute return implies a positive return. The word targeted merely implies the return expected by the manager. The word 'absolute' should be disallowed for all funds unless return of original capital is guaranteed.

l'ifa passeport en provenance de FranceFeb 27, 2013 at 13:31T Murphy

ok then i blame the IMA ! Targeted ?

Very Humerous?

My point was that small IFA's are being blamed for not realising that the Arch Cru funds were high risk. However, the IMA classified them as cautious managed funds. If an organisation the size of the IMA cannot get the classification right how were these small IFA firms meant to do so?

OK, so a change in name of the sector makes sense, but not sure whether Targeted Absolute Return is such a great improvement.

Partciularly when you consider the statement (from the article)

"The IMA has said that all funds in the sector must, as a minimum, target positive returns..."

That hardly differentiates them from the funds in the other 33 sectors...

If the IMA want to avoid any possible client (and maybe IFA) confusion a more appropriate name would have been the "We absolutely do not guarantee to produce a positive return just like every other fund out there" sector

Where does this leave the Global Growth sector? What if assets in this sector don't grow, but shrink?! OMG; what a disaster this could be for all concerned.

Will the IMA now publish a list of funds which do NOT target positive returns?

Keith

I don't see why absolute implies positive at all. Every definition I have ever seen says that it means something that shopudln't be compared with something else.

The name may be a bit of a get out, but really the sector is too disparate making comparisons all but meaningless.

Many funds that are run on absolute lines actually prefer the traditional sectors - Cautious Managed as was.

They all guarantee a positive return for the fund manager though.

As if the IMA classification should count for anything in the Absolute (targeted) return sector. Since these funds can switch risk on and off (look at Standard Life GARS) it depends on the day you are trying to recommend it.

Important thing to remember is that the IMA is an association for investment managers. It's got nothing to do with clients or their advisers. The purpose of the IMA sectors is to allow the employers of fund managers to work out what bonus to pay them.

We need an association of clients and advisers of investment managers, who would be interested in looking at the same things clients care about. That association might produce some sectors which would have relevance for clients.

@ Phillip Wise. Absolutely, IMA is a club for and on behalf of the fund managers, who want to sell more funds.

'Absolute Return' is a title completely counter to FSA Principle 7. Now the title has changed to 'targeted absolute funds' (over a longer time period). Obviously complete nonsense. Most of the best funds running to a defensive mandate which try to maintain a positive return don't sit in the AR sector. Remember that the fund managers self select which sector they want their fund to appear in....

Well that clears that one up. Almost as clear as renaming something Mixed Investment 40-85% shares

I agree with Phil Wise & Dathan.

@Compliance Officer: It's from the mathematical term 'absolute', which basically means "if it has a minus sign, drop it". | -7 | = | 7 | = 7. An absolute value is thus always positive.