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Fund sectors and categories

In the Old Mutual Wealth's platform Funds List funds are grouped into fund categories, which are determined according to where a fund's assets are primarily invested. The main categories are; Cash/Money Markets, UK Fixed Interest, International Fixed Interest, Property, UK Equity, International Equity and Managed.

Traditionally in the UK, similar funds are grouped together into sectors as defined by the Investment Management Association (IA) as a means for easy comparison. The IA sectors loosely correlate with Old Mutual Wealth categories but some, such as IA Targeted Absolute Return or IA Specialist may be represented by funds within a number of Old Mutual Wealth categories due to the diverse nature of these sectors and funds within them.

The Old Mutual Wealth fund categories are detailed below along with a list of the relevant IA sectors. Descriptions of the IA sectors are provided at the bottom of this page. Please note, not all funds in the Old Mutual Wealth list fit into an IA sector.

UK Equity

The Old Mutual Wealth UK equity category includes funds drawn from the UK equity fund sectors, as defined by the IA. UK equity funds invest in shares issued by quoted UK companies, although in some cases bonds are included in the portfolio. This category may also include funds within the IA Targeted Absolute Return and IA Specialist sectors whose focus is on UK equity. These sectors are listed below.

  • Targeted Absolute Return
  • Property (property securities)
  • Specialist
  • UK All Companies
  • UK Equity and Bond Income
  • UK Equity Income
  • UK Smaller Companies

UK equity funds form around 25% of the total number of funds in the entire UK fund universe; consequently, they take up a similar proportion of the Old Mutual Wealth fund range. UK equity funds are very prevalent because investors are so familiar with their home market and the investments are denominated in pounds sterling. 

International Equity

This category is subdivided into five regional categories. Each regional category includes funds drawn from the major global fund sectors, as defined by the IA.

North American

Most funds in this regional category invest in a broad range of US and Canadian companies.

  • North American
  • North American Smaller Companies

European

The European category includes funds investing primarily in European equities, drawn from the three European equity fund sectors, as defined by the IA.

  • Targeted Absolute Return
  • Europe excluding UK
  • Europe including UK
  • European Smaller Companies
  • Specialist

Japan

This category includes funds investing into Japanese equities. These funds are generally drawn from the two Japanese equity fund sectors defined by the IA.

  • Japan
  • Japan Smaller Companies
  • Targeted Absolute Return

Far East

This category includes funds investing generally throughout the Pacific Basin, including Australian and New Zealand securities.

  • Asia Pacific excluding Japan
  • Asia Pacific including Japan
  • China/Greater China
  • Specialist

Emerging Markets

This category includes funds which invest in less-developed markets, for instance in Eastern Europe, the Far East and Latin America.

  • Asia Pacific excluding Japan
  • Global Emerging Markets
  • Specialist

Global Specialist

This category includes a diverse range of funds which invest in markets globally and are not limited to investing into a particular region.

  • Global
  • Global Equity Income
  • Property (property securities)
  • Specialist
  • Technology and Telecommunications
  • Targeted Absolute Return

UK Fixed Interest

This category includes funds drawn from the five major UK fixed interest sectors, as defined by the IA.

  • Sterling Corporate Bond
  • Sterling High Yield
  • Sterling Strategic Bond
  • UK Gilt
  • UK Index Linked Gilts
  • Specialist

International Fixed Interest

This category includes funds investing in international bonds.

  • Global Bonds
  • Specialist
  • Targeted Absolute Return

Cash/Money Market

Funds within this category will feature prominently in lower risk portfolios. This category may include funds from the IA’s ‘Short-Term Money Market’ and ‘Money Market’ sectors, along with funds listed in the IA Protected sector. Note that such funds are often not guaranteed but may be managed with the objective of reducing downside movements in value. Funds from the IA’s Sterling Corporate Bond sector may, in certain circumstances, be included in the Cash/Money Market category where the expected behaviour is appropriate, ie where long-term volatility would rank the fund within Old Mutual Wealths’s lowest risk band (Risk Level 1).

  • Money Market
  • Protected Funds
  • Short-Term Money Market
  • Sterling Corporate Bond

Property

This category includes funds drawn from the IA Property sector which hold direct property investments, ie physical property. This category will not include funds which hold primarily property securities – these funds are included within other categories instead, eg Global Specialist.

Managed

There may be occasions where you or your financial adviser feels it is appropriate to invest in managed funds, rather than conduct a full asset allocation programme. For this reason, the fund range includes funds that offer a combination of equities and bonds from around the world in a single fund. Funds from the IA’s ‘Protected’ sector may be included in this sector in the fund range where the expected behaviour is appropriate. Note that such funds are often not guaranteed but may be managed with the objective of reducing downside movements in value.

This category may include funds from the following IA sectors:

  • Flexible Managed
  • Mixed Investment 0-35% Shares
  • Mixed Investment 20-60% Shares
  • Mixed Investment 40-85% Shares
  • Protected Funds
  • Specialist
  • Targeted Absolute Return

IA Sector definitions

Targeted Absolute Return – Funds managed with the aim of delivering positive returns in any market conditions, but returns are not guaranteed. Funds in this sector may aim to achieve a return that is more demanding than a “greater than zero after fees objective.” Funds in this sector must clearly state the timeframe over which they aim to meet their stated objective to allow the IA and investors to make a distinction between funds on this basis. The timeframe must not be longer than three years.

Asia Pacific excluding Japan – funds which invest at least 80% of their assets in Asia Pacific equities and exclude Japanese securities.

Asia Pacific including Japan – funds which invest at least 80% of their assets in Asia Pacific equities including a Japanese content. The Japanese content must make up less than 80% of assets.

China/Greater China – funds which invest at least 80% of their assets directly or indirectly in equities of the People's Republic of China, Hong Kong or Taiwan. Funds may invest in one or more of the countries.

Europe excluding UK – funds which invest at least 80% of their assets in European equities and exclude UK securities.

Europe including UK – funds which invest at least 80% of their assets in European equities. They may include UK equities, but these must not exceed 80% of the fund's assets.

European Smaller Companies – funds which invest at least 80% of their assets in European equities of companies which form the bottom 20% by market capitalisation in the European market. They may include UK equities, but these must not exceed 80% of the fund's assets. (‘Europe' includes all countries in the MSCI/FTSE pan European indices.)

Flexible Managed – the funds in this sector are expected to have a range of different investments. However, the fund manager has significant flexibility over what to invest in. There is no minimum or maximum requirement for investment in company shares (equities) and there is scope for funds to have a high proportion of shares.

Global – funds which invest at least 80% of their assets globally in equities. Funds must be diversified by geographic region.

Global Bonds – funds which invest at least 80% of their assets in fixed interest securities. All funds which contain more than 80% fixed interest investments are to be classified under this heading regardless of the fact that they may have more than 80% in a particular geographic sector, unless that geographic area is the UK, when the fund should be classified under the relevant UK (Sterling) heading.

Global Emerging Markets – funds which invest 80% or more of their assets in emerging market equities as defined by the relevant FTSE or MSCI Global Emerging Markets index.

Global Equity Income – funds which invest at least 80% of their assets globally in equities. Funds must be diversified by geographical region and intend to achieve a historic yield on the distributable income in excess of 110% of the MSCI World Index yield at the fund's year end.

Japan – funds which invest at least 80% of their assets in Japanese equities.

Japanese Smaller Companies – funds which invest at least 80% of their assets in Japanese equities of companies which form the bottom 30% by market capitalisation.

Mixed Investment 0-35% Shares – funds in this sector are required to have a range of different investments. Up to 35% of the fund can be invested in company shares (equities). At least 45% of the fund must be in fixed income investments (for example, corporate and Government bonds) and/or 'cash' investments. 'Cash' can include investments such as current account cash, short-term fixed income investments and certificates of deposit.

Mixed Investment 20-60% Shares – funds in this sector are required to have a range of different investments. The fund must have between 20% and 60% invested in company shares (equities). At least 30% of the fund must be in fixed income investments (for example, corporate and Government bonds) and/or 'cash' investments. 'Cash' can include investments such as current account cash, short-term fixed income investments and certificates of deposit.

Mixed Investment 40-85% Shares – funds in this sector are required to have a range of different investments. However, there is scope for funds to have a high proportion in company shares (equities). The fund must have between 40% and 85% invested in company shares.

Money Market – funds which invest their assets in money market instruments and comply with the definition of a ‘Money Market’ fund set out in the FCA COLL Sourcebook.

North America – funds which invest at least 80% of their assets in North American equities.

North American Smaller Companies – funds which invest a least 80% of their assets in North American equities of companies which form the bottom 20% by market capitalisation.

Pensions – funds, other than money market funds, which principally aim to provide a return of a set amount of capital back to the investor (either explicitly protected or via an investment strategy highly likely to achieve this objective) plus the potential for some investment return.

Property – funds which predominantly invest in property. In order to invest 'predominantly' in property, funds should either:

  • invest at least 60% of their assets directly in property; or
  • invest at least 80% of their assets in property securities; or
  • when their direct property holdings fall below the 60% threshold for a period of more than six months, invest sufficient of the balance of their assets in property securities to ensure that at least 80% of the fund is invested in property, whereupon it becomes a hybrid fund.

Protected – funds, other than money market funds, which principally aim to provide a return of a set amount of capital back to the investor (either explicitly protected or via an investment strategy highly likely to achieve this objective) plus the potential for some investment return.

Short-Term Money Market – funds which invest their assets in money market instruments and comply with the definition of a ‘Short-Term Money Market’ fund set out in the FCA COLL Sourcebook.

Specialist – funds that have an investment universe that is not accommodated by the mainstream sectors. Performance ranking of funds within the sector as a whole is inappropriate, given the diverse nature of its constituents.

Sterling Corporate Bond – funds which invest at least 80% of their assets in sterling denominated (or hedged back to sterling), Triple BBB minus or above corporate bond securities (as measured by Standard & Poors or an equivalent external rating agency). This excludes convertibles, preference shares and permanent interest bearing shares (PIBs).

Sterling High Yield – funds which invest at least 80% of their assets in sterling denominated (or hedged back to sterling) fixed interest securities and at least 50% of their assets in below BBB minus fixed interest securities (as measured by Standard & Poors or an equivalent external rating agency), including convertibles, preference shares and permanent interest bearing shares (PIBs).

Sterling Strategic Bond – funds which invest at least 80% of their assets in sterling denominated (or hedged back to sterling) fixed interest securities. This includes convertibles, preference shares and permanent interest bearing shares (PIBs). At any point in time the asset allocation of these funds could theoretically place the fund in one of the other Fixed Interest sectors. The funds will remain in this sector on these occasions since it is the Manager's stated intention to retain the right to invest across the sterling fixed interest credit risk spectrum.

Technology & Telecoms – funds which invest at least 80% of their assets in technology and telecommunications sectors as defined by major index providers.

UK All Companies – funds which invest at least 80% of their assets in UK equities which have a primary objective of achieving capital growth.

UK Equity & Bond Income – funds which invest at least 80% of their assets in the UK, between 20% and 80% in UK fixed interest securities and between 20% and 80% in UK equities. These funds aim to have a yield in excess of 120% of the FTSE All Share Index.

UK Equity Income – funds which invest at least 80% in UK equities and which intend to achieve a historic yield on the distributable income in excess of 110% of the FTSE All Share yield at the fund's year end.

UK Gilt – funds which invest at least 95% of their assets in sterling denominated (or hedged back to sterling) government backed securities, with a rating the same or higher than that of the UK, with at least 80% invested in UK government securities (Gilts).

UK Index Linked Gilt – funds which invest at least 95% of their assets in sterling denominated (or hedged back to sterling) government backed index linked securities, with a rating the same or higher than that of the UK, with at least 80% invested in UK Index Linked Gilts.

UK Smaller Companies – funds which invest at least 80% of their assets in UK equities of companies which form the bottom 10% by market capitalisation.

Unclassified – funds which do not want to be classified into other IA sectors such as private funds or funds which have been removed from other IA sectors due to non compliance.