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IFIC releases fund risk classification guidelines for the last time

FLASH | PRO LEVEL PRIVILEGE
By The IJ Staff | June 27 2017 01:30PM

Paul Bourque

The Investment Funds Institute of Canada (IFIC) has released its annual Voluntary Guidelines for Fund Managers Regarding Fund Volatility Risk Classification. This is the fifteenth and final time IFIC will release its guidelines.

“Long before this topic became a regulatory priority, the industry took the initiative to create voluntary guidelines for classifying, measuring and comparing the volatility risks of mutual funds,” said Paul C. Bourque, IFIC president and CEO in a statement released June 23. “For 15 years, the guidelines have provided a standardized framework for investors and advisors to evaluate whether the volatility risk of a fund is suitable based on the client’s needs and risk profile.”

The IFIC guidelines provide consistent measurement for volatility risk, as well as standardized terminology, categories and volatility risk descriptions of funds and have been used for the vast majority of funds over the past years.

Regulators will establish new methodology

As of Sept. 1, 2017, it will be the responsibility of the Canadian Securities Administrators (CSA) to establish a new risk classification methodology, which will be built on the standard deviation approach of the IFIC guidelines and will retain a five-band risk scale.

“It is a testament to the industry that the CSA guidelines substantially follow the approach used by the industry over the past 15 years,” Bourque said.

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