Fund categories could change after the Investment Management Association announced plans to review fund sectors.
The review will look into how funds are categorised after new legislation and changes to the way funds are managed raised questions from the IMA about how they should be advertised.
The Investment Management Association (IMA) said on Monday the rise of non-traditional forms of investment, such as short selling, challenges the existing system in which funds are categorised meaning where they invest is no longer clear cut.
At the moment fund managers are assessed according to their performance relative to peers in the same IMA sector but a review may call for changes to this system.
Jane Lowe, Director of Markets at the IMA said: "We think now is a good time to review IMA sectors. Fund managers have gained wider investment powers through changes in legislation and we are seeing the launch of new funds, which are characterised by their investment strategy, such as absolute return, rather than the assets they hold.
"The review is wide ranging and we expect it to take a considerable amount of time as the issues are complex and need careful attention. The IMA's sectors are designed to provide a basis for comparing funds which are broadly similar. Before making any major changes we want to be confident that our approach is robust and adds value for investors and their advisers."
Although the review will get under way immediately it is expected to be a lengthy and thorough process and no deadline has been set.
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