A new investment fund sector, the Deposit & Treasury sector, has been created by the Association of British Insurers (ABI) in response to demand for stability of capital.

The sector, which will be available on 1 November 2009, will have stricter limits on the types of instruments that funds can invest in, and on their maturity, in comparison to the current Money Market sector, which will continue to exist.

Money market funds that are only allowed to invest in relatively simple instruments such as time deposits or Government bonds, will be contained in the Deposit & Treasury sector, and all instruments held by the funds must be denominated in Sterling with a maximum duration of 12 months.

"This move is good news for consumers," said Maggie Craig, director of life and savings at the ABI. "It will make it easier for people seeking stability during the current volatility. Whilst no fund is risk free, the new sector will only contain the simplest funds available."
The ABI's life and pension sectors are a system for the categorisation of investment funds, with each sector carrying criteria that funds must follow if they wish to belong to it. There are 34 different ABI sectors, and over 7,000 funds are classified within them.

Instruments that are permitted for the Deposit & Treasury sector are current account cash, time deposits, certificates of deposit, UK treasury bills, UK short gilts and insured funds that track a recognised cash index.

Share Story: