IA eyes Global and Specialist sectors split
Expected by Q2 2021
The Investment Association (IA) has proposed splitting its Global and Specialist sectors, after its move to include physical exchange traded funds (ETF) in the universe yielded more submissions than expected.
The industry body has proposed eight new sectors be added: Latin America; India; Global Smaller Companies; Financials; Healthcare; Infrastructure; Commodity/Natural Resources; Gold and Precious Metals.
The new sectors are expected to be introduced from Q2 2021, according to a consultation on the proposals launched with the closing date for submissions on 11 December.
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It said the move came after it received a "far higher" number of submissions from ETF providers, which meant "some sectors [were] set to expand significantly in size as a result of ETFs being included".
The IA Global and IA Specialist sectors were identified as being needed to be broken up, "so that investors can more easily find and compare fund peer groups".
It comes a month after the IA's consultation period on the division of the Global Bonds sector into ten different categories, for the same reason, came to an end.
The IA outlined the definitions of each sector:
Latin America
Funds which invest at least 80% of their assets in Latin American equities (18 funds).
India
Funds which invest at least 80% of their assets in equities of India/the Indian sub-continent. Funds may invest solely in India or be diversified across the sub-continent (23 funds).
Global Smaller Companies
Funds which invest at least 80% of their assets in the equities of companies that form the bottom 15% by market capitalisation of the global market or that are no larger than the largest company in a recognised global small cap index, such as the MSCI AC Country World Small Cap Index (12 funds).
Financials
Funds that invest at least 80% of their assets in equities of financial services companies as defined by ICB/GICs, including industries such as banking, insurance, capital markets and consumer finance in any country (19 funds).
Healthcare
Funds that invest at least 80% of their assets in equities of companies that operate in sectors related to healthcare as defined by ICB/GICs, including industries such as pharmaceuticals, biotechnology and life sciences and healthcare equipment and services in any country (15 funds).
Infrastructure
Funds that invest at least 80% of their assets (directly or indirectly) in companies involved in the ownership, operation or maintenance of infrastructure assets (including but not limited to: utilities, energy, transport, health, education, security, communications) (24 funds).
Gold and Precious Metals
Funds that invest at least 80% of their assets in precious metal related securities (10 funds).
Commodities and Natural Resources
Funds that invest at least 80% of their assets in commodity or natural resources related equities (31 funds).
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