Segregated mandates for institutional investors included in a review by the UK’s Financial Conduct Authority (FCA) do not raise concerns about whether they deliver on expectations, a finding also applicable to the funds reviewed despite there being some shortcomings, according to the regulator.

The findings are from a thematic review the FCA carried out “to assess whether UK-authorised funds and segregated mandates are operated in line with investors’ expectations as set by marketing and disclosure material, and investment mandates”.

The thematic review appears to be separate from the asset management market study the FCA is conducting to assess whether the industry is delivering “value for money” for investors, but this is unclear.

The FCA did not respond to a question about this.

The thematic review covered 19 UK fund management firms responsible for 23 UK-authorised funds, all available to retail investors and using active investment strategies, and four segregated mandates.

The regulator said it did not assess more segregated mandates because the risks associated with communication and delivering on expectations are less prominent than in funds, where oversight is carried out by the authorised fund manager rather than directly by the investors.

“The mandates we reviewed were closely overseen by the client through regular reporting and meetings with the asset manager,” said the FCA.

“Clients were also sufficiently knowledgeable, or were provided with advice, to understand the risks inherent in the mandates and address potential concerns.”

As concerns the funds in the sample, most are investing in line with their stated strategy, said the FCA, although there are some examples of unclear product descriptions and inadequate governance or oversight.

Megan Butler, FCA director of supervision for investment, wholesale and specialists, said: “The industry needs to consider how it communicates when funds are linked to financial benchmarks.

“It is also vital funds keep investment practices under review so they match their stated aims and strategy, irrespective of whether the fund is still actively marketed because investors base their decisions on this information.”

The FCA said all fund management firms should consider the findings in its report and review their arrangements accordingly.

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