The European Fund and Asset Management Association (EFAMA) has published a set of European fund categories (EFC) that allows clearer comparisons between funds.
The new list allows users to make meaningful comparisons between funds and their peer groups within a system of fund categories described by the EFAMA as “transparent and fully defined”. The EFAMA is also recommending that the new categories be applied to both cross-border and domestic funds.
Peter De Proft, Director-General of EFAMA, believes the publication of this new report shows his Association’s commitment to strengthen the positioning of UCITS as a well regulated and transparent investment product making it ideally suited for retail investors. “The EFC categories provide the European fund industry with a tool to support the UCITS brand with a single standard of fund classification designed to give distributors and their clients the confidence that the funds they select are true to their label.”
Splitting the investment fund universe into six fund types, they are as follows:
* Equity, bond, multi-asset and money market funds which typically aim to achieve returns higher than a benchmark index, within a universe that is segmented according to eight criteria: country/region, sector, market capitalisation, currency, credit quality, interest rate, emerging market exposure and asset allocation.
* Absolute Return Innovative Strategies (ARIS) funds managed with the objective of generating a positive return over a cash benchmark, irrespective of market movements. These funds make extensive use of derivatives to short-long securities or the market as a whole.
* Other funds which fall outside the main EFC categories in their use of specialist investment strategies such as capital protected, real estate, convertibles.
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