CSA Propose Amendments To Standardize Mutual Fund And ETF Risk Classification

On December 10, 2015, the Canadian Securities Administrators (CSA) published for comment proposed amendments regarding mutual fund and ETF risk classification methodology for use in the Fund Facts document and the ETF Facts document.

Currently, the Fund Facts document requires a conventional mutual fund to provide its investment risk level based on a risk classification methodology which is chosen by the fund manager.  The CSA is proposing a standardized risk classification methodology in an effort to provide enhanced transparency and consistency in order to allow investors to more easily compare investment risk levels in different mutual funds.  Risk level would be categorized in one of five categories based on the degree to which returns varied over a 10-year period from the average return.  The proposed amendments would require the investment risk level to be determined for each Fund Facts and ETF Facts filing and at least annually.