Modifications are coming to the fund category schema courtesy of the Canadian Investment Funds Standards Committee (CIFSC).

The first major change is that the International Equity fund category definition is shifting and will require funds to invest at least 90% of their equity assets in countries other than Canada and the United States. That’s down from the current requirement of 95%.

The CIFSC will be introducing a ‘Canadian Synthetic Money Market’ category as well. This category will include funds that seek to obtain money-market-like returns by investing in a basket of equity securities or in one or more equity funds and then entering into forward, swap or similar derivatives contracts with a counter party or counterparties in order to replicate the returns of: a specific Canadian Money Market fund or a portfolio of Canadian dollar denominated money market securities.

They have also decided to create sub-divisions of the ‘Miscellaneous’ category to help investors and advisors identify the broad strategies used by funds categorized in this space.

The new sub-categories will be as follows:

a. Miscellaneous – Income & Real Property

These are funds that focus on fixed income type securities and do not qualify for any of the existing fixed income fund categories. Similarly, funds in this sub-category may use real property as a substitute for traditional income securities.

b. Miscellaneous – Leveraged

Funds in this sub-category are available for sale to retail investors and routinely employ leverage to give investors more than 100% exposure to various assets.

c. Miscellaneous – Commodity

Funds in this sub-category invest directly in physical commodities (e.g. owning gold bullion versus owning a gold mining stock).

d. Miscellaneous – Geographic Equity

Funds in this sub-category invest in equity securities focused on a specific geographic area or areas and do not qualify for any of the existing geographic equity categories.

e. Miscellaneous – Sector Equity

Funds in this sub-category invest in equity securities focused on a specific sector or sectors and do not qualify for any of the existing sector equity categories.

f. Miscellaneous – Other

Funds in this sub-category have a unique strategy that does not belong to any other category or any other Miscellaneous sub-category.

g. Miscellaneous – Undisclosed Holdings

Funds in this sub-category do not report their holdings to any of the data providers that sit on the CIFSC.