Denmark’s IFR claims European industry first in full implementation of EFC

Denmark has become the first country in Europe to fully implement changes to its domestic fund classification system in conjunction with the European Fund Classification developed through Efama, says the country’s fund association IFR.

The European Fund and Asset Management Association announced the launch of EFC in 2008, following work by its European Fund Categorization Forum, a working group made up of some of Europe’s largest asset managers, data providers and national associations.

Since then there has been a second version launched, in April 2012, that includes further categories. By summer 2012, EFC covered products from some 120 providers, meaning that it is well on its way to becoming a European standard, IFR said.

EFC was developed to enable fund investors to understand more precisely what is held by a fund, and to reduce arguments over how to classify products. The system works by screening funds for the actual holdings they have. This screening is based on data held by administrators such as Denmark’s FundConnect or Finestri, based in Luxembourg.

Once the underlying holdings are understood at the asset class level, EFC is meant to offer further information on structural characteristics and information such as whether a strategy is active or passive, whether there is a particular investment style, if there is a ethical/SRI overally, and to what extent currency plays a part.

IFR, the Federation of Danish Investment Associations, now says it has, as the first trade body in Europe, adjusted the domestic classification system used for its members to match the way EFC works.

The Association represents Danish collective investments, which are listed in Copenhagen for daily trading. Its statistics cover some 450 investment associations, with total AUM of more than DKK500bn (€67bn).

The new IFR headline classifications are as follows:

Real estate
Emerging markets
Single country
Far East
Climate and environment
Latin America
North America
Eastern Europe 
BondsShort Danish
Long Danish
Other Danish
Index Danish
Investment grade
Non-investment grade
Emerging markets
Mixed asset 
Hedge funds 
Money market funds 
Other collective investments 





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