Morningstar to replace Lipper for IMA monitoring

Handshake 3Fund analysis company Morningstar UK will replace Lipper as the appointed sector monitoring company for the Investment Management Association (IMA) on 1 October, after a competitive tender process.

The IMA said it chose Morningstar because of the company's “innovative thinking”, particularly in assessing funds that use derivatives. Morningstar said it hopes to work with the IMA to develop rules for assessing funds that are not suited to long-only portfolio monitoring.

Morningstar will analyse the portfolio holdings of each fund in the IMA's database on a monthly basis to ensure it meets the criteria of the sector it is placed in. If Morningstar finds that a fund has breached its sector requirements it will report the fund to the IMA, which may reclassify the fund.

The IMA's database of more than 2,500 UK funds is divided into five top-level sectors: capital protection, income, growth, specialist and unclassified. These are further subdivided according to the principal asset class or strategy.

Morningstar UK's CEO, Geoff Balzano, said: “Particularly crucial now is the increasing use of derivatives in investment management and the parallel importance of transparency around their use. By working with the IMA, we are helping to ensure that its sector classification system will evolve to capture and reflect the impact of these increasingly important securities.”

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