After a series of high-profile losses in its money market fund sector, the Association of British Insurers has created the Deposit and Treasury sector, which will provide tighter controls on permitted investments.
In February, Standard Life had to pay £100 million to investors after its Sterling cash fund lost 5% of its value by investing in asset-backed securities. The Threadneedle UK Money Securities Fund lost more than 10% in 4Q08 due to its investments in mortgage-backed securities.
The group said funds in the new sector will only be allowed to invest in simple investments like government bonds and time deposits.
The Deposit and Treasury sector will launch on Nov. 1.