Offshore Funds and the IMA

From today the Investment Management Association (IMA) is including offshore funds in its sector classification system. A total of 91* funds will be included in 17 different IMA sectors. This is up from the 71 funds announced on 23 March,* as since then the IMA has received outstanding data from more funds that now meet the requirements.

In total, the IMA received admission requests from 180 funds, and there are now 69 pending, awaiting the finalization of queries and data from the funds. Once they are complete, they will be added to the appropriate sectors.

To be included in IMA sectors, funds need to be domiciled in the EU, as well as authorized in their own country, comply with UCITS regulations and be registered for sale in the UK. To satisfy UK domiciled retail investors, transactions should be in sterling. Therefore, most funds offer a sterling share class or one that is hedged back to sterling. However those that don't will typically provide a currency dealing facility. Funds must also have either Distributor or Reporting Fund status for tax purposes.***

IMA will shortly be calling for submissions to the second phase of entry for offshore funds. A third phase is anticipated in the last quarter of 2010.

Commenting, Jane Lowe, Director of Markets at the IMA, said:

"Funds are being admitted to 17 different IMA sectors, with the largest number, 42, going into the Specialist sector. It's pleasing to see the number of offshore funds that will be included initially. We expect the number to grow during the course of this year.

"Setting out clear criteria means that investors can compare offshore funds on a like-for-like basis with UK domiciled funds. Advisers and investors need to be aware that there are some differences when purchasing offshore funds, so the IMA has produced a factsheet."

The offshore funds will be fully integrated into the existing sector classification system, allowing comparisons between funds to be made on a like for like basis. However, the IMA will flag which funds are offshore so that investors and IFAs may search for this data if they so require.