Two become one
Investors and advisers often use Investment Management Association (IMA) sectors as a benchmark to understand funds and compare their performance to others with a similar mandate.
The IMA has decided to combine two of the equity income sectors into one.
From 1st July 2010, funds from the IMA UK Equity Income and UK Equity Income and Growth sectors will both be included within the UK Equity Income sector.
This new combined sector will also have a revised definition – “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.”
The UK Equity Income and Growth sector previously contained twenty investment funds and all twenty will be moved across to the UK Equity Income sector.
With the recent problems at BP, which has historically been a very strong dividend payer, it will be interesting to see if any funds fail to meet the 110% yield target. This will be measured over three year rolling periods by taking a simple average of the yield figure achieved for each fund at its year end.