The Investment Funds Institute of Canada’s (IFIC) has issued its latest guidance for fund firms on measuring and reporting volatility risk on Tuesday.
Many mutual fund portfolio managers use IFIC’s to guide their assessment of their funds’ volatility risk, which is then used in disclosures to investors. This year’s guidelines come at a time at which the Canadian Securities Administrators (CSA) is currently working on a standardized methodology for measuring and reporting risk to investors in the Fund Facts disclosure documents.
The CSA has indicated that it hopes to finalize rules mandating a risk classification methodology in its current fiscal year in order to enhance transparency to investors and improve the comparability of funds’ risk ratings.
In the meantime, however, many firms continue to rely on the voluntary IFIC guidelines, which are reviewed annually and updated to reflect current benchmark data.
Last year, the guidance was expanded and updated to avoid situations in which fund managers could use only short-term volatility measures to classify their funds. This year, there are no similarly substantive changes to the guidance.
IFIC notes that the French version of the updated guidelines will be released shortly.