IMA criticises FSA over absolute return proposals

The Investment Management Association (IMA) has criticised FSA proposals aiming to clarify the definition of absolute return funds, warning it risks putting UK-authorised funds at a disadvantage.

In a quarterly consultation paper, the Financial Services Authority asked the industry for feedback on funds promising an ‘absolute’ or ‘total return’, saying fund definitions could imply an element of capital protection or a guarantee of positive returns which may not be achievable. The regulator has warned such definitions have the potential to mislead investors. The watchdog is proposing firms running absolute return funds should be subject to additional disclosures. These would "inform investors that there may be a risk to their capital, provide information on the anticipated time...