IFIC Releases Updated Risk Classification Guidelines

par Andrew Rickard | July 20 2015 10:08AM

The Investment Funds Institute of Canada (IFIC) has released an updated version of its Voluntary Guidelines for Fund Managers Regarding Fund Volatility Risk Classification, which is meant to help fund managers apply a consistent volatility classification methodology and provide risk disclosure for their funds.

IFIC says it has made several changes to the document, revising the introduction so that it is now geared towards a wider audience and adding a new list of frequently asked questions. The language has also been altered in the methodology sub-section, and a sub-section to deal with annual reviews has been added.

In the previous version of the guidelines, IFIC points out that fund managers could simply classify their funds according to the standard deviation (SD) bands when only looking at a fund’s short-term volatility. "The modified version of Appendix 1 aims to avoid these types of occurrences – it includes ‘Point in Time’ and ‘Rolling Averages’ standard deviation figures to give fund managers an appreciation for the different SD band ranges that are possible," explains IFIC.

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