Julian Knight: So, as clear as mud then for fund investors

Gutless attempt to simplify the situation relating to absolute returns is just a waste of time

Phew! Thank goodness for that. I was beginning to get worried about the proliferation and potential mis-selling of absolute return funds. These funds, which sprang up a few years ago, use often-fiendishly complex financial transactions, supposedly to deliver steady returns in good and bad times for the market.

All sounds great, but the problem is they often come with high charges, and it has been shown that to date they don't really work. Many of them are so complex experts suggest that instead of being safe-ish investments – more so than, say, technology, smaller-companies or emerging-markets funds, for instance – they are in fact inherently risky, and this is hidden behind jargon that would make the Sir Humphreys of this world purr with pleasure.

But now, after an exhaustive and lengthy probe of the sector, the Investment Management Association has come up with how it intends to protect investors from being potentially misled by Absolute Returns and that is – wait for it – tack the word "targeted" on to the front of Absolute Returns, so in future they will be called Targeted Absolute Returns. This is meant to inform ordinary investors that there are no guarantees with absolute returns. Self-regulation in all its Technicolor glory.

What we actually needed from the IMA was a bit of leadership, a genuine sifting of the wheat from the chaff in the sector so that when investors are being sold – very few voluntarily buy one of these products – they can be sure that what they are getting is broadly as described by their financial adviser. A clearer demarcation of what is an absolute return fund, and what is something much riskier posing under the name absolute returns, was what was needed.

Instead we have the mean-nothing, do-nothing, no one-cares "targeted" tacked on to the front of the product. A complete waste of time, energy and yet another example of the gutlessness of bodies that purport to represent the financial services industry.

Let's power up energy rivalry

I could almost hear the cracking of knuckles and collective grinding of teeth as British Gas announced bumper profits only a short time after it had hiked its energy prices. The UK's largest gas and electricity supplier is making a profit equivalent to £50 per customer a year.

Unlike many, I don't chide a company for making profits. After all, we all benefit through our pension funds, unit trusts and the wider economy. And what's more, as a keen watcher of the energy market, I find British Gas is far from the worst practitioner in the space, it just seems so because it has high name recognition and a huge number of customers.

But I think the reaction was such because most people feel that the market is simply unfair. We have replaced a nationalised industry with a six-way monopoly, and those private firms have been allowed, in the turgid language of business, to sweat to exhaustion the assets they acquired at privatisation.

Now that our power supply is creaking, they are being allowed to up their bills above and beyond what is justified by the wholesale market price in which they collectively have a hand in setting. The comparison sites say shop around for a deal – they would say that though, wouldn't they? – but after the first time you do it, the savings are pretty minimal.

Meanwhile, you feel that the regulator Ofgem would like to put a bridle on the suppliers but have been outmanoeuvred in Whitehall, and subsequently rather given up the game. What we desperately need is more competition in the energy market – particularly on the wholesale side. That way, when we hear of profits made by an energy supplier, we won't feel so ripped off.

Suggested Topics
News
Susan Sarandon described David Bowie as
peopleSusan Sarandon reveals more on her David Bowie romance
Sport
sportDidier Drogba returns to Chelsea on one-year deal
Arts and Entertainment
The Secret Cinema performance of Back to the Future has been cancelled again
film
News
people
PROMOTED VIDEO
Arts and Entertainment
Christian Grey cradles Ana in the Fifty Shades of Grey film
filmFifty Shades of Grey trailer provokes moral outrage in US
Sport
Louis van Gaal would have been impressed with Darren Fletcher’s performance against LA Galaxy during Manchester United’s 7-0 victory
football
Voices
The new dawn heralded by George Osborne has yet to rise
voicesJames Moore: As the Tories rub their hands together, the average voter will be asking why they're not getting a piece of the action
Sport
Dejan Lovren celebrates scoring for Southampton although the goal was later credited to Adam Lallana
sport
News
newsComedy club forced to apologise as maggots eating a dead pigeon fall out of air-conditioning
Arts and Entertainment
Jo Brand says she's mellowed a lot
tvJo Brand says shows encourage people to laugh at the vulnerable
Life and Style
People may feel that they're procrastinating by watching TV in the evening
life
Sport
Rhys Williams
commonwealth games
News
Isis fighters travel in a vehicle as they take part in a military parade along the streets of Syria's northern Raqqa province
i100
Arts and Entertainment
Southern charm: Nicolas Cage and Tye Sheridan in ‘Joe’
filmReview: Actor delivers astonishing performance in low budget drama
Life and Style
fashionLatex dresses hit the catwalk to raise awareness for HIV and Aids
Travel
travel
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Senior Risk Manager - Banking - London - £650

    £600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...

    The benefits of being in Recruitment at SThree...

    £18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...

    Test Analyst - UAT - Credit Risk

    £280 - £300 per day + competitive: Orgtel: Test Analyst, Edinburgh, Credit Ris...

    Trainee Recruitment Consultants - Banking & Finance

    £20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

    Day In a Page

    Finding the names for America’s shame: What happens to the immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert?

    Finding the names for America’s shame

    The immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert
    Backhanders, bribery and abuses of power have soared in China as economy surges

    Bribery and abuses of power soar in China

    The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
    Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

    Highland terriers steal the show at opening ceremony

    Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
    German art world rocked as artists use renowned fat sculpture to distil schnapps

    Brewing the fat from artwork angers widow of sculptor

    Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
    BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

    BBC takes viewers back down memory lane

    The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
    Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

    Nicolas Cage shines in low-budget drama Joe

    Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
    How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

    Make your own ice lollies and frozen yoghurt

    Think outside the cool box for this summer's tempting frozen treats
    Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

    Fiesta is UK's most popular car of all-time

    Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
    10 best reed diffusers

    Heaven scent: 10 best reed diffusers

    Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
    Commonwealth Games 2014: Female boxers set to compete for first time

    Female boxers set to compete at Commonwealth Games for first time

    There’s no favourites and with no headguards anything could happen
    Five things we’ve learned so far about Manchester United under Louis van Gaal

    Five things we’ve learned so far about United under Van Gaal

    It’s impossible to avoid the impression that the Dutch manager is playing to the gallery a little
    Screwing your way to the top? Good for Lana Del Rey for helping kill that myth

    Screwing your way to the top?

    Good for Lana Del Rey for helping kill that myth, says Grace Dent
    Will the young Britons fighting in Syria be allowed to return home and resume their lives?

    Will Britons fighting in Syria be able to resume their lives?

    Tony Blair's Terrorism Act 2006 has made it an offence to take part in military action abroad with a "political, ideological, religious or racial motive"
    Beyoncé poses as Rosie the Riveter, the wartime poster girl who became a feminist pin-up

    Beyoncé poses as Rosie the Riveter

    The wartime poster girl became the ultimate American symbol of female empowerment
    The quest to find the perfect pair of earphones: Are custom, 3D printed earbuds the solution?

    The quest to find the perfect pair of earphones

    Earphones don't fit properly, offer mediocre audio quality and can even be painful. So the quest to design the perfect pair is music to Seth Stevenson's ears