For immediate release
EFAMA publishes new European Fund Classification Categories
Brussels, 23rd April 2012 – The European Fund and Asset Management Association (EFAMA) has published today a report which presents a complete set of categories to facilitate the use of the European Fund Classification (EFC) by all industry stakeholders. The EFC is a pan-European classification system of investment funds that has been developed by the European Fund Classification Forum – a working group of EFAMA – to allow all interested stakeholders, in particular fund distributors, to group cross-border funds with comparable investment strategies. The classification of funds according to the EFC criteria is done by a neutral classification administrator on the basis of the funds’ portfolio holdings.
The EFC categories will enable fund groups to identify the specific EFC category to which each of their funds belongs to. It will also enable meaningful comparisons between funds and their peer groups within a system of fund categories that is transparent and fully defined. The publication of the EFC categories will also facilitate the adoption of the EFC for the classification of both cross-border and domestic funds.
Under this system, the investment fund universe is split into 6 types of funds:
- Equity, bond, multi-asset and money market funds: these funds typically aim to achieve returns higher than a benchmark index, within a universe that is segmented according to eight criteria: country/region, sector, market capitalization, currency, credit quality, interest rate, emerging market exposure and asset allocation.
- Absolute Return Innovative Strategies (ARIS) funds: these funds are managed with the objective of generating a positive return over a cash benchmark, irrespective of market movements. In general, these funds make extensive use of derivatives to short-long securities or the market as a whole.
- Other funds: these funds fall outside the main EFC categories because they use specialist investment strategies such as capital protected, real estate, convertibles.
The publication of the EFC categories report is accompanied by a spreadsheet showing in which EFC categories 3,296 cross-border funds (13,048 share classes) belong to. These funds are promoted by 125 fund managers, including many belonging to the largest European fund management groups.
The list below shows the most populated EFC categories in each fund type, together with the number of share classes regrouped in each category and the definition of each category (see “notes to editors”).
- Equity global advanced markets (1,222)
- Bond emerging global (382)
- Multi-asset global advanced markets balanced (144)
- Money market fund EUR (56)
- Multi-strategy ARIS (120)
- Convertibles (249)
Peter De Proft, Director General of EFAMA, adds: “With the publication of this new report, EFAMA confirms its commitment to strengthen the positioning of UCITS as a well regulated and transparent investment product, 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 fund they select are true to their label.”
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For further information:
Peter De Proft Bernard Delbecque
Director General Director of Economics and Research
+32-2-513 39 69 +32-2-513 39 69
Notes to editors
· EFAMA is the representative association for the European investment management industry. It represents through its 26 member associations and 58 corporate members approximately EUR 14 trillion in assets under management, of which EUR 8.0 trillion was managed by approximately 54,000 funds at end of December 2011. 36,000 of these funds are UCITS (Undertakings for Collective Investments in Transferable Securities) funds.
The European Fund Categorisation Forum (EFCF) is made up of experts representing the European investment fund industry, i.e. fund management companies, data vendors, distributors.
Definition of the most populated EFC categories
- Equity Global Advanced Markets
Funds that invest at least 80% of their assets in a diversified portfolio of shares of companies established in at least two advanced market regions without a single country or region focus
Funds that have a minimum 80% exposure to fixed income securities issued or guaranteed in at least two emerging market regions
- Multi-Asset Global Advanced Markets Balanced
Funds that invest at least 80% of their assets in a diversified portfolio of shares of companies established in at least two advanced market regions without a single country or region focus, with at least 35% and no more than 65% of the assets invested in variable income securities, with the rest of the portfolio invested in debt securities, cash and cash equivalents
Funds complying with the ESMA guidelines on a common definition of European money market funds that invest their portfolio in money market instruments denominated in EUR with a maximum weighted average maturity (WAM) of 6 months
Funds that follow different types of strategies (equity long-short, commodities, volatility arbitrage, etc.)
Funds that invest at least 70% in convertible bonds and primarily in equity linked notes, with less than 30% exposure to primarily equity linked notes
To obtain a copy of the EFC categories report, and the spreadsheet presenting the first classification results based on the EFC categories, please visit EFAMA website at the following address here.