At the end of March, the European Fund Classification Forum – set up under the auspices of EFAMA (the European Fund and Asset Management Association) – has classified 2,847 funds, incorporating 10,155 share classes. By the end of June these numbers had increased to 5,822 funds and 14,559 share classes.
In the short term, the aim of the EFC Forum is to classify and monitor those investment funds for sale in multiple jurisdictions; its longer-term aim is to cover every Ucits fund. For both, the information will be made available to all interested stakeholders, primarily fund buyers and fund managers.
The driver for this is to “enhance the integrity” of European investment funds and was largely borne out of the 2007/2008 crisis that highlighted the need for comparisons to be made easier.
In its latest report, the EFC Forum confirmed it has agreed the high level of categories under which the fund sectors will be grouped. As a result, the universe of equity, bond, mixed and money market funds will be segmented according to: country/region, sector, market capitalisation, currency, credit quality, interest rate, emerging market exposure and asset allocation.
A full report detailing these categories will be produced in the first quarter of next year.
In the immediate future, the EFC Forum is to encourage distribution platforms to include the classifications – Allfunds has already signed up to do so – with fund managers encouraged to provide portfolio data for the classification of their home-domiciled funds.
