What are Managed Investments?
Managed investments are investments in funds which are governed by guidelines set by the Investment Management Association, to ensure that they invest within certain key parameters. The guidelines make it possible to divide managed investment funds into groups with similar characteristics, using a classification system which comprises over thirty sectors.
Each fund is overseen by a professional fund manager who refers to the guidelines to ensure that his fund is operating within the limitations of its sector, as defined in the classification system.
The guidelines therefore ensure that funds within each category can meaningfully be compared with each other.
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The sector categories are broadly divided into managed investment funds aiming to provide income and managed investment funds aiming to provide growth. However, some categories also include funds which are managed investments aiming for a mixture of both income and growth, or which are focused on capital protection.
The sectors in the classification system show those managed investments which invest in similar assets, or the same sectors of the stock market, or in the same geographical region.
Managed Investments – targeting Capital Protection
Money Market funds are managed investments which hold at least 95% of assets in cash and near cash instruments including bank deposits or very short term fixed interest securities.
Protected funds are managed investments, other than money market funds, which aim to provide a return of a set amount of capital back to the investor.
Managed Investments – Funds principally targeting income
There are a wide variety of managed investments which aim for income and include a range of bond funds, usually investing over 80% of their assets in a particular type of bond.
In the mixed asset sector, UK Equity and Bond Income funds offer a managed investment where at least 80% of its assets are held in the UK, with 20-80% of assets in UK fixed interest securities and 20-80% in UK equities. These managed investments aim to have a yield in excess of 120% of the FTSE All Share Index.
UK Equity Income funds provide a managed investment of at least 80% in UK equities, aiming for a historic yield of 110% of the FTSE All Share yield at year end.
Managed investments in the UK Equity Income & Growth category invest at least 80% of assets in UK equities, and produce a combination of both income and growth.
Managed Investments – Mixed Asset Sectors
Cautious Managed funds are managed investments with up to 60% in equities and at least 30% invested in fixed interest and cash.
Balanced Managed funds are managed investments with a maximum of 85% of the fund invested in equities, and at least 10% of the fund held in non-UK equities.
Active Managed funds are managed investments where the manager can invest up to 100% of the fund in equities, with at least 10% in non-UK equities. These funds may at times hold a high proportion of non-equity assets, which could place the fund in either the Balanced or Cautious sector.
