European Fund Classification System Expands to Cover 180,000 Fund Share Classes

The European Fund Classification (EFC) system, a pan-European standard managed by the European Fund and Asset Management Association (Efama), has significantly expanded its scope, now covering nearly 180,000 fund share classes across numerous European countries.

This development means that the majority of European funds have now received an official EFC classification from Efama, reinforcing the system’s importance as a comprehensive tool for categorising funds within the European investment industry.

The recent expansion of the EFC introduces several new fund categories, reflecting shifts in market dynamics. These new classifications include categories for crypto asset funds, foreign exchange funds, and ultra-short bond funds. At its most granular level, the system now encompasses over 880 fund subcategories, ensuring that the classification remains responsive to the evolving demands of the investment sector.

One of the distinctive features of the EFC is its governance structure. It is the only classification system fully managed by the fund industry itself, and it operates entirely free of charge. This means that both fund providers and data users can access the classification results without any financial barriers, with the information available either on the EFC website or via custom data feeds.

Efama emphasized that by expanding its reach and staying aligned with market trends, the EFC has become a key resource in the European investment landscape, offering transparent and accessible fund classification throughout the region. Thomas Tilley, a senior economist at Efama, highlighted the significance of the system’s growth, stating, “The recent leap in the number of EFC classified funds further establishes it as THE credible and comprehensive fund classification scheme for Europe. In the current value for money discussions, it looks possible that some form of peer comparison to evaluate whether funds are indeed providing value for money will be mandated. The EFC, as the only industry-driven, transparent and fully objective pan-European fund classification scheme, could form the basis of such a peer comparison.”

With its expanded coverage and commitment to transparency, the EFC continues to play a crucial role in the classification and evaluation of European funds, providing the industry with an invaluable tool for categorising investment vehicles in a rapidly evolving market.

By fLEXI tEAM