The ABI is proposing to introduce a new fund sector to help consumers easily find the right money market fund for them to invest in. ABI Fund Sectors categorise different types of investment fund, allowing consumers and financial advisers to compare funds with similar investment profiles against each other.
While no fund is without risk the new sector will seek to help consumers identify funds that have a greater focus on capital stability. The proposed new sector would have stricter limits on the type of instruments funds can invest in and their maturity.
In order to seek views on its proposals the ABI has launched a consultation. The closing date for the consultation is Friday 8 May 2009.
The introduction of a new sector is to help consumers find funds that offer greater stability, says Maggie Craig, director of Life and Savings, ABI. This is not about the introduction of new funds, but rather to bring-in clearer labelling of what already exists. The new sector will run in parallel to the existing money market sector.
This initiative is in direct response to what consumers and advisers have been telling us they want. With volatility in the markets many people want to easily choose a stable way to invest their money.
This consultation paper is only the first stage of our regular review cycle and, as usual, we will be looking at all the sectors in due course, says Jeremy Thatcher, chairman of the Investment Classification Committee, ABI. During this wider review we will carefully look at all aspects of the sectors to ensure that the sectors continue to serve the needs of consumers and advisers.
These reviews are essential as advisers trust the ABI Sectors and value their impartiality.
The Institutional Money Market Funds Association (IMMFA) welcomes the open consultation of the Association of British Insurers (ABI) on its money market sector review.
“The ABI review is one of several pieces of work being conducted on money market funds across the globe, which include those of the rating agencies and regulatory bodies, says Kathleen Hughes, chairman, Communications Committee. IMMFA continues to engage with all relevant bodies to ensure there is clarity and a consistency of terminology which will benefit investors and wider market participants.
The ABI proposals to introduce a cash-like sector that is limited to those funds who have a principal objective of capital security is consistent with the purpose of those funds represented by IMMFA. We will be responding positively to the consultation to advocate the inclusion of the IMMFA membership within this cash-like sector.
L.D.