Standard & Poor’s today launched a new tool to help Canadian investors track mutual fund volatility and risk.

The credit rating company’s “Sensitivity Ratings” provide an opinion of how much a fund’s share price or total return might shift as market conditions change. The rating categories enable investors to decide how much potential risk exposure they want within their fund portfolio.

“We have developed these ratings because currently there is no universally accepted measurement of a fund’s volatility that can be consistently applied to funds with different types of assets,” said S&P fund analyst Joel Friedman, in a release.

“As new fund products have increased over the past few years, a risk measure that cuts across asset types and identifies volatility at its core, will offer greater transparency for everyone in the market” according to managing director Gary Arne.

Leverage, trading history, contingency plans and other criteria factor in to ratings, which range from “extremely low” to “extremely high.” The risk-free benchmark is the Bank Of Nova Scotia one-year Canadian T-bill index.

The ratings system was launched in Latin America three years ago.