Investment - Articles - IMA issues guidance on past performance presentation for RDR

 The Investment Management Association (IMA) has issued guidance to its members on the presentation of past performance for RDR share classes, effective from 1 January 2013.

 In the absence of regulatory guidance and in the interests of trying to limit variations in approach, the IMA has proposed that asset managers extend the track record for existing retail share classes to the new RDR share classes. This means retaining the impact of higher fees of existing classes on performance data.

 The guidance will encourage a consistent approach amongst asset managers in the way they report past performance for RDR share classes to investors.

 Jane Lowe, IMA's Director of Markets, said:

 "Current ESMA rules leave it to individual asset managers to choose how they present past performance information for the new RDR share classes. However it's important that the industry adopts a consistent methodology for presenting the data.

 "Using historic track records based on the higher fees of existing retail share classes is the more cautious approach to presenting the data to investors. It is typically more representative of what they will have experienced. Using synthetic track records - those that exclude adviser charging - could mislead consumers into believing the industry has delivered better performance than it has."

 The guidance also retains the data vendors' existing calculation methodology for IMA sector averages of using the highest retail fee share class as the primary share class. The IMA will review this methodology in 2013.