TORONTO, Aug. 18, 2015 /CNW/ - The Canadian ETF Association (CETFA) and Fundata Canada Inc. are pleased to announce the launch of the CETFA ETF Risk Ratings. The new ratings are designed to give ETF providers and the industry a consistent set of risk measures to help investors and advisors choose risk-appropriate exchange-traded funds (ETFs) for investment portfolios.
"With the explosive growth of the ETF industry in Canada, CETFA felt it was necessary to create a uniform risk-rating system, similar to that used by the mutual funds industry," said Pat Dunwoody, Executive Director of the Canadian ETF Association.
"CETFA partnered with Fundata Canada to create a consistent, transparent methodology to allow for simple comparisons while we wait for the release of the CSA mandated methodology," said Ms. Dunwoody. "Fundata's long history in tracking the Canadian investment fund industry and its deep analytical expertise in creating ratings systems and risk indices made it our prime choice for filling the gap in Canadian ETF risk metrics," she added.
The CETFA Risk Ratings are calculated and maintained by Fundata Canada with a methodology that includes average 3- and 5-year rolling standard deviations of the ETF, available proxy data, and CIFSC category. The current ETF risk-ratings follow thresholds established by the Investment Funds Institute of Canada, with the risk categories following the same five point scale from Low to High required on the regulated Fund Facts documents.
Providers may shift their product "up" a risk category if they feel it is a more representative rating. This helps providers adjust for the recent low-risk environment, which may not be representative of the longer-term risk rating of the product.
While ETF providers are currently still responsible for publishing their own risk ratings, CETFA will provide the new risk ratings on all Canadian-listed ETFs as a temporary stop-gap measure until the Canadian Securities Administrators mandates a comprehensive risk-rating methodology for all mutual funds and ETFs.
The CETFA ETF Risk Ratings will be published in the monthly CETFA Industry Statistics Report and will be available through Fundata client data feeds.
About the Canadian ETF Association
The Canadian ETF Association is a member-supported ETF industry association whose purpose is to create more awareness about ETFs and to provide greater depth of education to investors about their usage. CETFA also deals with industry-specific issues, whether regulatory or structural, that affect all member firms. CETFA's mandate allows the Association to take an activist role on behalf of all ETF providers to improve industry practices and defend the positions of member firms.
About Fundata Canada Inc.
Fundata Canada Inc. has been providing data aggregation, analytics, and dissemination services to the Canadian media and financial marketplace since 1987. Fundata is a major player in the distribution of investment fund information in Canada. Fundata's database tracks over 35,000 investment funds and clones, covering 850 data points, as well as stocks traded on North America's largest exchanges. Fundata provides customized data feeds, analytics, software tools, and hosted web solutions for fund companies, back office systems, investment planners, banks, trust companies, resellers and redistributors, and online, print, and broadcast media channels. Its FundGrade® Rating System and Prospectus Risk Indices™ have become industry standards, while the prestigious annual FundGrade A+ Awards honour Canada's very best mutual funds and ETFs.
SOURCE Fundata Canada Inc.
For further information: Pat Dunwoody, Executive Director, Canadian ETF Association, 416-603-7837, www.cetfa.ca; Reid Baker, Director, Analytics & Data, Fundata, 647-216-3280, Reid.email@example.com