Sector definitions

There are over 30 IMA sectors. Sector definitions are mostly based on assets, such as equities and fixed income, and may also have a geographic focus. A few sectors focus on investment strategy, such as Absolute Return. You can use the sectors to compare funds, for instance to look at performance and fund charges.

The sectors are divided into four broad groups, each with a different investment focus: Growth, Income, Capital Protection and Specialist funds. Some funds choose to remain Unclassified within the sectors.

FUNDS PRINCIPALLY TARGETING CAPITAL PROTECTION

Money Market
Funds which invest at least 95% of their assets in money market instruments (i.e. cash and near cash, such as bank deposits, certificates of deposit, very short term fixed interest securities or floating rate notes).

Protected Funds
Funds, other than money market funds, which principally aim to provide a return of a set amount of capital back to the investor (either explicitly protected or via an investment strategy highly likely to achieve this objective) plus the potential for some investment return.

FUNDS PRINCIPALLY TARGETING INCOME (BY ASSET CATEGORY)

FIXED INCOME SECTORS

UK Gilts
Funds which invest at least 95% of their assets in Sterling denominated (or hedged back to Sterling) triple AAA rated, government backed securities, with at least 80% invested in UK government securities (Gilts).

UK Index Linked Gilts
Funds which invest at least 95% of their assets in Sterling denominated (or hedged back to Sterling) triple AAA rated government backed index linked securities, with at least 80% invested in UK Index Linked Gilts.

£ Corporate Bond
Funds which invest at least 80% of their assets in Sterling denominated (or hedged back to Sterling), Triple BBB minus or above corporate bond securities (as measured by Standard & Poors or an equivalent external rating agency). This excludes convertibles, preference shares and permanent interest bearing shares (PIBs).

£ Strategic Bond
Funds which invest at least 80% of their assets in Sterling denominated (or hedged back to Sterling) fixed interest securities. This includes convertibles, preference shares and permanent interest bearing shares (PIBs). At any point in time the asset allocation of these funds could theoretically place the fund in one of the other Fixed Interest sectors. The funds will remain in this sector on these occasions since it is the Manager's stated intention to retain the right to invest across the Sterling fixed interest credit risk spectrum.

£ High Yield
Funds which invest at least 80% of their assets in Sterling denominated (or hedged back to Sterling) fixed interest securities and at least 50% of their assets in below BBB minus fixed interest securities (as measured by Standard and Poors or an equivalent external rating agency), including convertibles, preference shares and permanent interest bearing shares (PIBs).

Global Bonds
Funds which invest at least 80% of their assets in fixed interest securities. All funds which contain more than 80% fixed interest investments are to be classified under this heading regardless of the fact that they may have more than 80% in a particular geographic sector, unless that geographic area is the UK, when the fund should be classified under the relevant UK (Sterling) heading.

MIXED ASSET SECTORS

UK Equity & Bond Income
Funds which invest at least 80% of their assets in the UK, between 20% and 80% in UK fixed interest securities and between 20% and 80% in UK equities. These funds aim to have a yield in excess of 120% of the FTSE All Share Index.

EQUITY SECTORS

UK Equity Income
Funds which invest at least 80% in UK equities and which intend to achieve a historic yield on the distributable income in excess of 110% of the FTSE All Share yield at the fund's year end.

FUNDS PRINCIPALLY TARGETING GROWTH (BY ASSET CATEGORY)

EQUITY SECTORS

UK Equities

UK All Companies
Funds which invest at least 80% of their assets in UK equities which have a primary objective of achieving capital growth.

UK Smaller Companies
Funds which invest at least 80% of their assets in UK equities of companies which form the bottom 10% by market capitalisation.

Overseas Equities

Japan
Funds which invest at least 80% of their assets in Japanese equities.

Japanese Smaller Companies
Funds which invest at least 80% of their assets in Japanese equities of companies which form the bottom 30% by market capitalisation.

Asia Pacific including Japan
Funds which invest at least 80% of their assets in Asia Pacific equities including a Japanese content. The Japanese content must make up less than 80% of assets.

Asia Pacific excluding Japan
Funds which invest at least 80% of their assets in Asia Pacific equities and exclude Japanese securities.

China/Greater China sector
Funds which invest at least 80% of their assets directly or indirectly in equities of the People's Republic of China, Hong Kong or Taiwan. Funds may invest in one or more of the countries.

North America
Funds which invest at least 80% of their assets in North American equities.

North American Smaller Companies
Funds which invest a least 80% of their assets in North American equities of companies which form the bottom 20% by market capitalisation.

Europe including UK
Funds which invest at least 80% of their assets in European equities. They may include UK equities, but these must not exceed 80% of the fund's assets.

Europe excluding UK
Funds which invest at least 80% of their assets in European equities and exclude UK securities.

European Smaller Companies
Funds which invest at least 80% of their assets in European equities of companies which form the bottom 20% by market capitalisation in the European market. They may include UK equities, but these must not exceed 80% of the fund's assets. (‘Europe' includes all countries in the MSCI/FTSE pan European indices.)

Global
Funds which invest at least 80% of their assets globally in equities. Funds must be diversified by geographic region.

Global Emerging Markets
Funds which invest 80% or more of their assets in emerging market equities as defined by the relevant FTSE or MSCI Global Emerging Markets index.

MIXED ASSET SECTORS

Cautious Managed
Funds investing in a range of assets with the maximum equity exposure restricted to 60% of the fund and with at least 30% invested in fixed interest and cash. There is no specific requirement to hold a minimum % of non UK equity within the equity limits. Assets must be at least 50% in Sterling/Euro and equities are deemed to include convertibles.

Balanced Managed
Funds would offer investment in a range of assets, with the maximum equity exposure restricted to 85% of the Fund. At least 10% of the total fund must be held in non-UK equities. Assets must be at least 50% in Sterling/Euro and equities are deemed to include convertibles.

Active Managed
Funds would offer investment in a range of assets, with the Manager being able to invest up to 100% in equities at their discretion. At least 10% of the total fund must be held in non-UK equities. There is no minimum Sterling/Euro balance and equities are deemed to include convertibles. At any one time the asset allocation of these funds may hold a high proportion of non-equity assets such that the asset allocation would by default place the fund in either the Balanced or Cautious sector. These funds would remain in this sector on these occasions since it is the Manager's stated intention to retain the right to invest up to 100% in equities.

SPECIALIST SECTORS

Absolute Return
Funds managed with the aim of delivering absolute (i.e. more than zero) returns in any market conditions. Typically funds in this sector would normally expect to deliver absolute (more than zero) returns on a 12 months basis.

Personal Pensions
Funds which are only available for use in a personal pension plan or FSAVC (Free Standing Additional Voluntary Contribution) scheme. Present arrangements for unit trust personal pension schemes require providers to set up separate personal pension unit trust under an overall tax sheltered umbrella. These funds then in turn invest in the group's equivalent mainstream trusts. Pension funds are not to be confused with "Exempt" funds which are flagged separately.

Property
Funds which predominantly invest in property. In order to invest "predominantly" in property, funds should either: invest at least 60% of their assets directly in property; or invest at least 80% of their assets in property securities; or when their direct property holdings fall below the 60% threshold for a period of more than 6 months, invest sufficient of the balance of their assets in property securities to ensure that at least 80% of the fund is invested in property, whereupon it becomes a hybrid fund.

Specialist
Funds that have an investment universe that is not accommodated by the mainstream sectors. Performance ranking of funds within the sector as a whole is inappropriate, given the diverse nature of its constituents.

Technology & Telecommunications
Funds which invest at least 80% of their assets in technology and telecommunications sectors as defined by major index providers.

Unclassified
Funds which do not want to be classified into other IMA sectors such as private funds or funds which have been removed from other IMA sectors due to non compliance. IMA collects static data on these funds and they contribute to the assets and flows data provided in the IMA monthly statistics.

Source: Investment Management Association January 2011

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