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Canadian Securities Regulators Seek Comments on a Mutual Fund Risk Classification Methodology

  • Securities - CSA Image

Dec 10, 2015

On December 10, 2015, the Canadian Securities Administrators (CSA) published for comment proposed amendments that would require fund managers to use a standardized risk classification methodology (the Proposed Methodology) when determining a risk level for conventional mutual funds and exchange-traded mutual funds (ETFs) in the Fund Facts and in the proposed ETF Facts, respectively.

The Proposed Methodology includes the following features:

  • applies to both conventional mutual funds and ETFs;
  • uses standard deviation based on 10 years of a mutual fund’s performance history;
  • allows the use of a reference index to act as a proxy for mutual funds that do not have 10 years of performance history;
  • retains the prescribed five-category risk scale, ranging from Low to High, currently in the Fund Facts, and in the proposed ETF Facts; and
  • requires the investment risk level to be determined for each filing of the Fund Facts or ETF Facts, as applicable, and at least annually.

Review the press release and the standardized risk classification methodology on the CSA's Web Site.

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