UK IMA opts against changing fixed income sector currency rules

UK fund industry association the IMA has decided not to modify its sector rules governing fixed income funds’ currency exposure, it is reported.

Last November the Investment Management Association was considering tightening the sector definitions, amid concerns some fund managers in the Sterling Corporate Bond sector were using currency bets heavily within their portfolios.

The IMA sector definition says funds are required to invest at least 80% of their assets in sterling denominated assets (or hedge 80% of the portfolio back into sterling) with a maximum of 20% of portfolios exposed to bonds denominated in overseas currencies.

According to InvestmentEurope‘s sister title Investment Week it is understood the IMA was considering reducing the 20% maximum allocation to overseas currencies to reduce currency bets. However, according to sources, the IMA has written to tell members the rules will not be altered.

“The IMA has notified us they will not be making any changes to the currency rules and the current definition will remain the same,” said one source.

The IMA declined to comment on the decision, stating a wider review of the fixed income sectors is still ongoing.

Since April 2012, the IMA has been consulting with members over changes to the bond sectors, including limiting exposure to asset-backed securities and reviewing the classification of short-term bonds as cash.


This article was first published on Investment Week

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