Association of British Insurers (ABI) - sector definitions

The ABI is a trade body that represents the insurance industry. It maintains ranges of investment fund sectors (see below) to facilitate comparisons between similar unit-linked funds.

These sectors allow advisers and investors to make like-for-like comparisons between unit-linked funds which invest in, or can potentially invest in, broadly comparable assets.

  • Funds in this sector can hold a high proportion of emerging market shares
  • Funds which invest at least 80% of their assets in Asia Pacific equities, but which normally hold no equities quoted on the Japanese stock market
  • Asia Pacific includes all countries in the FTSE All World Asia Pacific index
  • Funds in this sector can hold a high proportion of emerging market shares
  • Funds which invest at least 80% of their assets in Asia Pacific equities and which include Japanese equities
  • Asia Pacific includes all countries in the FTSE All World Asia Pacific index
  • Not to include funds which would otherwise qualify for the Japan Equity sector
  • Funds that invest at least 80% of their assets in commodity and/or energy related securities

Funds in this sector must meet the following conditions:

  • The primary investment objective of the fund is to maintain capital and aim to provide a return in line with money market rates, before charges
  • Invest 100% of the fund in Sterling denominated permitted Instruments
  • Permitted instruments are:
    • Current account cash
    • Time Deposits (including call accounts)
    • Certificates of Deposit
    • UK Treasury Bill
    • UK Short Gilts
  • Reverse repurchase agreements (with collateral limited to Gilts)
  • Comply with selected paragraphs of the European Securities and Markets Authority (ESMA) guidelines on money market funds

Funds in this sector must aim to generate or pay out income for investors.

  • Maximum of 60% total equity (including Preference Shares, Permanent Interest Bearing Shares and Convertibles)
  • Minimum of 20% total equity
  • Minimum of 50% Sterling based assets (including fixed interest hedged back to Sterling)
  • Fixed interest defined as Government Sovereign Bonds and Corporate Bonds

  • Funds which invest at least 80% of their assets in equities quoted on European stock markets, but which normally hold no equities quoted on the UK stock market
  • Europe includes all countries in the FTSE World Europe/MSCI Europe indices

  • Funds which invest at least 80% of their assets in equities quoted on UK and European stock markets
  • Not to include funds which would otherwise qualify for a UK Equity sector
  • Europe includes all countries in the FTSE World Europe/MSCI Europe indices

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. The manager is accorded a significant degree of discretion over asset allocation and is allowed to invest up to 100% in equities at their discretion:

  • No minimum equity requirement
  • No minimum fixed income or cash requirement
  • No minimum currency requirement
  • Funds which invest at least 80% of their assets in equities from emerging markets, as defined by the FTSE All World Index, without geographical restriction
  • Funds which invest at least 80% of their assets in equities
  • Funds must be invested in more than one equity region
  • Not to include funds which would otherwise qualify for the Global Emerging Markets Equity sector
  • Funds which invest at least 80% of their assets in non-UK broad investment grade fixed interest securities
  • Fixed interest defined as Government Sovereign Bonds and Corporate Bonds. Preference Shares, Permanent Interest Bearing Shares and Convertibles are not treated as fixed interest investments
  • Funds in this sector can hold a high proportion of emerging market securities
  • Funds which invest at least 80% of their assets in non-UK fixed interest securities
  • Funds which invest at least 50% of their assets in sub investment grade and/or emerging market fixed interest securities, without geographical restriction
  • Fixed Interest securities defined and Government sovereign bonds, local authority bonds, supranational bonds and corporate bonds, convertibles, preference shares and permanent interest bearing shares (PIBs)
  • Funds that invest at least 80% of their assets in direct property and property securities
  • Minimum 50% non-UK assets

  • Funds which invest at least 80% of their assets in equities quoted on the Japanese stock market

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.

  • Maximum 35% equity exposure (including convertibles)
  • No minimum equity requirement
  • Minimum 45% investment grade fixed income and cash
  • Minimum 80% investment in established market currencies (US Dollar, Sterling & Euro) of which 40% must be Sterling
  • Sterling requirement includes assets hedged back to Sterling

* The definition for each sector shows how much flexibility the fund manager has over the range of investments in a fund. Funds in these sectors can hold a mix of investments which typically include company shares, bonds, "cash" and commercial property. Managers may use a range of different investment strategies.

The sectors are not designed to reflect the risk of individual funds.

The names of the Mixed Investment sectors show the maximum and minimum amount that funds within each sector may invest in company shares. This includes investments that give an exposure to shares, for example, a derivative that gives exposure to the FTSE100 index.

The sectors group together funds that are broadly similar, in line with the definitions. The criteria for the sectors overlap, to give managers flexibility. This means that a fund may sometimes meet the requirements of more than one of the sectors.

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.

  • Maximum 60% equity exposure (including convertibles
  • Minimum 20% equity exposure
  • Minimum 30% fixed income and cash
  • Minimum 60% investment in established market currencies (US Dollar, Sterling & Euro) of which 30% must be Sterling
  • Sterling requirement includes assets hedged back to Sterling

* The definition for each sector shows how much flexibility the fund manager has over the range of investments in a fund. Funds in these sectors can hold a mix of investments which typically include company shares, bonds, "cash" and commercial property. Managers may use a range of different investment strategies.

The sectors are not designed to reflect the risk of individual funds.

The names of the Mixed Investment sectors show the maximum and minimum amount that funds within each sector may invest in company shares. This includes investments that give an exposure to shares, for example, a derivative that gives exposure to the FTSE100 index.

The sectors group together funds that are broadly similar, in line with the definitions. The criteria for the sectors overlap, to give managers flexibility. This means that a fund may sometimes meet the requirements of more than one of the sectors.

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.

  • Maximum 85% equity exposure (including convertibles)
  • Minimum 40% equity exposure No minimum fixed income or cash requirement
  • Minimum 50% investment in established market currencies (US Dollar, Sterling & Euro) of which 25% must be Sterling
  • Sterling requirement includes assets hedged back to Sterling

* The definition for each sector shows how much flexibility the fund manager has over the range of investments in a fund. Funds in these sectors can hold a mix of investments which typically include company shares, bonds, "cash" and commercial property. Managers may use a range of different investment strategies.

The sectors are not designed to reflect the risk of individual funds.

The names of the Mixed Investment sectors show the maximum and minimum amount that funds within each sector may invest in company shares. This includes investments that give an exposure to shares, for example, a derivative that gives exposure to the FTSE100 index.

The sectors group together funds that are broadly similar, in line with the definitions. The criteria for the sectors overlap, to give managers flexibility. This means that a fund may sometimes meet the requirements of more than one of the sectors.

Funds in this sector must meet the following conditions:

  • The primary investment objective of the fund is to maintain capital and aim to provide a return in line with money market rates, before charges
  • Invest in permitted instruments with at least 95% of the fund in Sterling (or hedged back to Sterling) money market instruments
  • Permitted instruments are:
    • Current Account Cash
    • Time Deposits
    • Money Market instruments which meet the definition set out in Directive 2009/65/EC
    • Collective Investment undertakings which comply with the definition of Short-Term Money Market fund or Money Market fund set out in the European Securities and Markets Authority (ESMA) guidelines on money market funds
  • Comply with selected paragraphs of the European Securities and Markets Authority (ESMA) guidelines on money market funds
  • Funds which invest at least 80% of their assets in equities quoted on United States and Canadian stock markets
  • 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 guaranteed or via an investment strategy highly likely to achieve this objective) plus some market upside
  • Funds that have an investment universe that is not accommodated by any of the other ABI sectors
  • As funds in this sector do not meet any pre-set parameters, these should not be compared on a like-for-like basis
  • Funds which invest at least 80% of their assets in Sterling-denominated (or hedged back to Sterling) broad investment grade corporate bond securities. This excludes Preference Shares, Permanent Interest Bearing Shares and Convertible Securities
  • Funds which invest at least 80% of their assets in Sterling-denominated (or hedged back to Sterling) broad investment grade fixed interest securities
  • Fixed Interest securities defined as Government sovereign bonds, local authority bonds, supranational bonds and corporate bonds. Preference shares, permanent interest bearing shares (PIBs) and convertibles are not treated as broad investment grade fixed interest investments
  • Funds which invest at least 80% of their assets in Sterling-denominated (or hedged back to Sterling) fixed interest securities
  • Funds which invest at least 50% of their assets in sub-investment grade fixed interest securities, convertibles, preference shares and permanent interest bearing shares (PIBs)
  • Fixed Interest securities defined as Government sovereign bonds, local authority bonds, supranational bonds and corporate bonds. Supranational bonds are treated as corporate bonds
  • The usage of convertibles, preference shares and PIBs is not inhibited and there may be considerable investment in them for the higher risk/higher return funds
  • Funds (used in conjunction with pension plans) with a specific objective for the movement in the value of units in the fund to approximate to movements in annuity purchase prices
  • Funds which invest at least 80% of their assets in Sterling-denominated (or hedged back to Sterling) long duration (10 years or more) broad investment grade fixed interest securities
  • Funds with investment policy permitting significant changes in asset allocation between broad investment grade fixed interest securities and sub-investment grade fixed interest securities, convertibles, preference shares and permanent interest bearing shares (PIBs)
  • Funds which invest at least 80% of their assets in Sterling-denominated (or hedged back to Sterling) fixed interest securities, convertibles, preference shares and PIBs
  • Fixed Interest securities defined as Government sovereign bonds, local authority bonds, supranational bonds and corporate bonds. Supranational bonds are treated as corporate bonds
  • The usage of convertibles, preference shares and PIBs is not inhibited and there may be considerable investment in them for the higher risk/higher return funds
  • Funds which invest at least 80% of their assets in equities quoted on the UK stock market
  • Funds have the primary objective of achieving capital growth or total return
  • Funds that normally invest at least 80% of their assets in UK property. Managers may occasionally use Property Index Certificates or other property instruments for up to 20% property investment
  • UK property defined as real estate located within the UK
  • Funds which invest at least 80% of their assets in equities quoted on the UK stock market
  • Net of tax yield on the underlying portfolio of at least 110% of the FTSE All-Share yield
  • It is not normally possible to derive income from life and pension funds as they are not income-generating assets. However, there is clearly a distinct style evident in funds invested in this way and the parameters for the UK Equity Income Sector aim to group these in a comparable way
  • Funds invest at least 95% of their assets in: UK Government securities (Gilts)
  • UK Government backed securities Sterling denominated (or hedged back to Sterling) AAA rated, overseas government backed securities
  • At least 80% of the fund must be invested in UK Government securities (Gilts)
  • Funds which invest at least 95% of their assets in:
    • UK Government Index Linked securities (Index Linked Gilts)
    • UK Government backed Index Linked securities, or
    • Sterling denominated (or hedged back to Sterling) AAA rated, overseas government backed Index Linked securities
  • At least 80% of the fund must be invested in UK Index Linked Government securities (Index Linked Gilts)
  • Funds that invest at least 80% of their assets in property securities quoted on the UK stock market and direct property located in the UK
  • Property securities include real estate investment trusts, shares issued by companies that own, develop or manage direct property and Property Index Certificates
  • Funds which invest at least 80% of their assets in equities quoted on the UK stock market which form the bottom 10% by market capitalisation
  • This sector is for funds that do not provide sufficient data to be monitored, and consequently cannot be compared on a like-for-like basis

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