EFAMA launches fund categorisation system
23 June 2008

Written by Sophie Baker

The European Fund and Asset Management Fund (EFAMA) has launched the European Fund Classification (EFC), a new industry initiative which aims to bring greater transparency to fund categorisation across Europe.

Support for the initiative has been voiced by cross-border fund management associations, data vendors and national associations. The EFC has been designed to improve choice for pan-European fund distributors and their clients through a set of new standards, and it is hoped that they will facilitate easy comparison of funds across the most popular investment sectors.

The European Fund Categorisation Forum (EFCF), an EFAMA working group made up of representatives from some of Europe’s largest asset managers, data providers and national associations, designed the EFC, and it is believed that adoption of the EFC should bring less controversy in sector/peer group classification. Therefore, fund providers will have to spend less time in bilateral discussions with data vendors to clarify definitional issues. The EFC also offers a ‘common language’ with the aim of making discussions more efficient.

Robert Higginbotham, president Europe for Fidelity International, and chairman of the EFCF, commented: “The single market for European funds has brought many benefits for investors, not least an expansion in the choice of products. But with growth in choice comes the risk of confusion: investors’ inability to compare different products may lead them to select inappropriate products or deter them from investing entirely.”

Higginbotham added that this is the reason that the EFC is so important, and that “it also represents an opportunity for the fund industry to show that it can act in ways that enhance the customer’s understanding of investments – and so grow the market overall.”