Moves by European regulators to provide a standard risk rating for investment funds needs further refining to make them truly effective for consumers, according to the Association of British Insurers (ABI) and the Investment Management Association (IMA).
CESR, the Committee of European Securities Regulators, put forward its proposals for a standardised risk and reward rating methodology in December 2009. It is now being considered by the European Commission for use when firms produce Key Information Documents (KIDs) for UCITS funds, starting from the second half of 2011. Joint ABI and IMA research shows 70% of asset classes rated using the proposed method in 2006 would have had their risk categories changed only three years later. Doubling the period of data used when assessing the relative risk of a fund lead to a significantly more r...
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