The Investment Association (IA) today issued new guidelines on the UK Equity Income and Global Equity Income sectors, to ensure they can continue to function effectively in the best interests of savers and investors in the Coronavirus pandemic.
The IA’s UK Equity Income and Global Equity Income sectors are comprised of 87 and 57 funds respectively, and aim to provide investors with a regular income based on the dividend payments from the companies the fund is invested in.
In light of COVID-19 many companies have reviewed their dividends with some suspending or postponing payments, which has impacted equity income funds. This means some funds may be unable to meet the requirements to be included in these sectors, including two tests based on the annual and three year rolling average yields of the FTSE All Share and the MSCI World indices.
The new guidelines are designed to prevent any short-term disruption to these sectors, so that savers can continue to easily identify and compare equity income funds. They will also enable fund managers to focus on long-term outcomes for savers, instead of potentially needing to make immediate changes to meet sector requirements.