FCA warns of asset manager failings on closet trackers and soft closed funds

Thematic review showed most funds correctly marketed

The Financial Conduct Authority has urged asset managers to ensure correct management and marketing of funds, after finding several closet trackers and soft closed funds with unclear product descriptions and inadequate governance.

In a thematic review of 23 funds titled 'Meeting investors' expectations', the FCA found that although most UK funds were operated in line with investors' expectations, three so-called 'closet trackers' did not clearly indicate the investment strategy was constrained, with limited freedom in relation to a benchmark. It also found two other funds had material passive holdings that were not adequately disclosed. The regulator also notes documents for one fund used jargon that a retail investor would be unlikely to understand. The review also looked at four funds which were not active...