The Investment Association (IA) today announces the conclusion of its UK Equity Income sector review.
Following extensive consultation with consumers, financial advisers and product providers, the IA’s Sectors Committee and the IA Board have decided to lower the sector’s yield hurdle from 110% to 100% of index yield over a three year rolling period.
Although the new three year rolling yield target is now set at 100%, failure to achieve 90% of the index yield in any one year period will still result in a fund being removed from the sector.
To ensure there is consistency for consumers and advisers across the equity income sectors, funds in the Global Equity Income sector will also now have a yield target of 100% of its respective index - the MSCI World Index - over a three year rolling period.
Members are now invited to submit funds that they believe meet the new sector definition and criteria. The new definition will be effective from 3 April 2017.
Galina Dimitrova, Director, Capital Markets, said:
“The primary purpose of the IA sectors is to serve the needs of consumers and their advisers. Any change to how they are classified must be done in their best interests.
“The decision to lower the yield hurdle has come after comprehensive consumer research and industry consultation. The change is designed to ensure that consumers and advisers have better visibility of the choice of equity income products that exceed their respective market yields.
“As ever, we will continue to monitor the fund market to ensure that all of the IA sectors reflect the wide range of products the asset management industry has to offer savers around the world.”
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The UK Equity Income review asked the industry, consumers and their advisers to decide between three options:
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