23 Jan, 2008
Published: 12:00 Wednesday 23 January
By: Dylan Lobo, Investment News Editor
F&C fund of funds manager Richard
Philbin has urged the Investment Management Association (IMA) to
get tough on funds which consistently flout the rules in the Equity
His comments come after the IMA redefined the way yield is
calculated on Equity Income funds in a bid to improve transparency
in the sector.
Under the previous regime the yield calculation was based on a
snapshot of the underlying yield of the securities in the
portfolio. Through the new guidelines the focus is on the income
the fund has distributed over a historical 12-month period.
While welcoming the move, Philbin said it is essential the IMA is
not lenient on those funds which continue to break the rules.
He said: 'The IMA has to vigorously challenge the funds that are
not meeting the criteria, and show they have teeth in my opinion,'
Philbin said. 'We need to have clear delineation between Equity
Income and UK All Company funds.
'I'm glad they are suggesting all funds fall in line with how the
calculations are made, so all are fishing in the same pond so to
speak. However, they should threaten a number of funds to be
expelled from the sector for blatant disregard of the rules.'
Meanwhile, Newton Investment Management fund manager Tineke Frikkee
was in full support of the IMA move and said she had been using the
new methodology on her £3.3 billion Newton Higher Income
(Newton Higher Income) fund, which has yielded 5.2%, for a
'We believe that these changes will provide investors and advisers
with a more comparable peer group which consistently delivers above
average income to their investors,' she said.