The Investment Association has delayed the inclusion of ETFs into its fund sectors following a greater level of interest from ETF providers “than expected”.

ETFs had been scheduled to be included in Q1 this year following the IA’s decision in May 2019 to allow ETFs to be compared against the 3,500 mutual funds already in the 37 sectors.

However, the decision to delay, which comes after discussions with IA members and external stakeholders, has been done due to the high levels of applications the IA received from ETF issuers.

Some 500 ETFs have already been put forward with the IA predicting this number to rise further. The announcement in May initially said around 200 products would enter its sectors.

The association said it is continuing to work to accommodate these ETFs in an updated framework.

Miranda Seath, head of market insight at the IA, commented: “As the retail market continues to evolve, it is important that the sectors are as easy as possible to navigate and retain the ability to help compare like-for-like funds.

“Our 2020 work programme is designed to achieve this and facilitate the inclusion of ETFs.”

The initial decision to include ETFs in its sectors came after a public consultation which ran between 29 November 2018 and 1 February 2019.

To be included, ETFs must be physically replicated and be either UK domiciled or are EU UCITS with HMRC reporting fund status.

One stumbling block the IA may have run into is trying to decide which like-for-like ETFs can enter its sectors. For example, choosing between which Euro Stoxx 50 ETF from BlackRock, Vanguard, Lyxor and all the other issuers could have proved an issue.