Canadian Securities Regulators Seek Comments on a Mutual Fund Risk Classification Methodology

MONTRÉAL, Dec. 10, 2015 /CNW Telbec/ - The Canadian Securities Administrators (CSA) today published for comment proposed amendments that would require fund managers to use a standardized risk classification methodology (the Proposed Methodology) when determining a risk level for conventional mutual funds and exchange-traded mutual funds (ETFs) in the Fund Facts and in the proposed ETF Facts, respectively.

Currently, fund managers must identify a mutual fund's risk level on a five-category scale (ranging from Low to High) prescribed in the Fund Facts, and the methodology for determining the risk level is chosen at fund managers' discretion.

The CSA developed the Proposed Methodology in response to feedback received throughout the course of the point of sale disclosure project regarding the lack of consistency in investment risk level disclosure for mutual funds.

In December 2013, the CSA published CSA Notice 81-324 and Request for Comment Proposed CSA Mutual Fund Risk Classification Methodology for Use in Fund Facts for consultation, and the input received informed the Proposed Methodology.

The Proposed Methodology includes the following features:

  • applies to both conventional mutual funds and ETFs;
  • uses standard deviation based on 10 years of a mutual fund's performance history;
  • allows  the use of a reference index to act as a proxy for mutual funds that do not have 10 years of performance history;
  • retains the prescribed five-category risk scale, ranging from Low to High, currently in the Fund Facts, and in the proposed ETF Facts;  and
  • requires the investment risk level to be determined for each filing of the Fund Facts or ETF Facts, as applicable, and at least annually.

"The introduction of a standardized mutual fund risk classification methodology will result in greater transparency and consistency, which will allow investors to more readily compare the investment risk levels of different mutual funds," said Louis Morisset, Chair of the CSA and President and CEO of the Autorité des marchés financiers. "We believe that the Proposed Methodology will benefit both investors and market participants," he concluded.

The CSA welcomes feedback on the Proposed Methodology, which can be found on CSA members' websites. The 90-day comment period will close on March 9, 2016.

The CSA, the council of the securities regulators of Canada's provinces and territories, co‑ordinates and harmonizes regulation for the Canadian capital markets.

For more information: 

Kristen Rose                                                               

Mark Dickey

Ontario Securities Commission                         

Alberta Securities Commission



Richard Gilhooley                                                        

Sylvain Théberge

British Columbia Securities Commission                       

Autorité des marchés financiers



Ainsley Cunningham                                                     

Andrew Nicholson

Manitoba Securities Commission                                  

Financial and Consumer Services


Commission, New Brunswick


Tanya Wiltshire                                                

Janice Callbeck           

Nova Scotia Securities Commission                             

Office of the Superintendent of Securities         




Don Boyles                                                                

Rhonda Horte  

Office of the Superintendent of Securities                     

Office of the Yukon Superintendent of

Newfoundland and Labrador                                       




Jeff Mason 

Tom Hall

Nunavut Securities Office   

Northwest Territories


Securities Office


Noel Busse

Financial and Consumer Affairs

Authority of Saskatchewan      



SOURCE Autorité des marchés financiers

For further information: For more information: Kristen Rose, Ontario Securities Commission, 416-593-2336; Mark Dickey, Alberta Securities Commission, 403-297-4481; Richard Gilhooley, British Columbia Securities Commission, 604-899-6713; Sylvain Théberge, Autorité des marchés financiers, 514-940-2176; Ainsley Cunningham, Manitoba Securities Commission, 204-945-4733; Andrew Nicholson, Financial and Consumer Services, Commission, New Brunswick, 506-658-3021; Tanya Wiltshire, Nova Scotia Securities Commission, 902-424-8586; Janice Callbeck, Office of the Superintendent of Securities, P.E.I., 902-368-6288; Don Boyles, Office of the Superintendent of Securities, Newfoundland and Labrador, 709-729-4501; Rhonda Horte, Office of the Yukon Superintendent of Securities, 867-667-5466; Jeff Mason, Nunavut Securities Office, 867-975-6591; Tom Hall, Northwest Territories, Securities Office, 867-873-7490; Noel Busse, Financial and Consumer Affairs, Authority of Saskatchewan, 306-798-4160

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