Fundata Canada captures 99.9% of the current
Prospectus Risk Ratings for the more than 21,000
prospectus-issuing mutual funds in Canada.
According to recommendations by the Investment Funds Institute of Canada, standard deviation is the most widely understood measure of portfolio risk, and should be related to the Prospectus Risk ranking
assigned to a fund. However, fund managers may
assign any risk rating they decide is suitable for the fund.
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There are five Prospectus Risk rating categories:
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LOW TO MEDIUM |
MEDIUM |
MEDIUM TO HIGH |
HIGH |
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This can cause significant discrepancies among the standard deviation of funds within the same risk
category. The Fundata Prospectus Risk Indices highlight these discrepancies and provide objective Prospectus Risk benchmarks to measure the degree to which a fund stays within or varies from its stated risk category.
The Fundata Prospectus Risk Indices will give investors a standard by which to measure mutual funds according to the level of risk assigned by the fund manager.
The Prospectus Risk Indices were constructed using the following methodology:
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- An equal-weighted index that tracks performance and risk-return profiles of constituent funds
- Funds must have three or more years of history
- The same constituents test is used for each Index, and risk ratings are updated monthly
- Grouped funds are plotted in terms of 3 year annualized standard deviation versus 3 year compound return
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FUNDATA PROSPECTUS RISK INDICES
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Suited for:
- Advisors
- Investors
- Fund Managers
- Brokers and Dealers
- Fund Companies
- Resellers and Redistributors
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