EFAMA - EFC Categories

Q: What does the European Fund Classification (EFC) standard define?

The EFC is a proven and stable classification method based on the portfolio holdings of funds, rather than fund labels or marketing categories. It brings tangible benefits to all market participants by enabling transparent comparisons of funds and facilitating peer group analysis. The enriched data set offered by the classification enhances depth of possible analysis, making it highly versatile and applicable across diverse regulatory, investment, and reporting contexts.

Q: How does the EFC relate to existing industry practices and regulations?

Supported by EFAMA, the EFC serves as an industry-led standard that replaces fragmented, proprietary classification systems used by different industry players. It enhances transparency and facilitates cross-border fund distribution by providing a single, objective classification framework across Europe. The schema is regularly updated to include new categories, reflecting the evolving nature of the investment landscape.

Q: What is the difference between verified and indicative classifications?

The EFC offers two types of classification: **verified classification**, which is based on analysis of actual portfolio holdings data and is regularly monitored; and **indicative classification**, which serves as a preliminary step toward full verification. The monitoring is carried out by a neutral Classification Administrator (FE fundinfo), while fund managers remain actively involved throughout the process.

Q: What are Additional Categorisation Elements and structural flags?

Beyond the primary category, the EFC includes a number of structural characteristics and flags that provide additional context about a fund. These include indicators such as whether a fund is passively or actively managed, whether it is open-ended or closed-ended, and investment themes for equity funds. These flags are presented alongside the main classification results and can be declared by fund providers to the Classification Administrator for inclusion in the public report.

Q: What is the EFC Category Code and how can it be used?

The EFC Category Code is a 13-step alphanumeric code that provides a structured, machine-readable representation of a fund's classification. The code is built on a consistent logic applicable across all asset classes, whereby each position in the code corresponds to a specific classification parameter. Not all steps will be populated for every fund, as their relevance varies depending on the asset class. The EFC Category Code is particularly useful for organisations looking to store, process, or automate the handling of classification results in a systematic way.

The European Fund Classification (EFC) is a pan-European classification system of investment funds which has been developed by the European Fund Categorisation Forum (EFCF) – a dedicated Task Force of the European Fund and Asset Management Association (EFAMA). The EFC classification schema is well-defined and built on transparent classification criteria that permit an easy comparison of like-for-like investment funds across different European jurisdictions. The EFC fund universe is split into 6 main, high-level categories: Equity, Bond, Multi-asset, Money market, “Absolute Return Innovative Strategies” (ARIS) and Other. Those six categories are then further broken down into subcategories based on a combination of different categorisation elements. These subcategories are both exhaustive and unique, offering a level of detail and differentiation that sets it apart from other fund classification systems. A fund can only belong to one category, ensuring clear and comparable results. The term “fund” covers all types of funds, including all funds classified according to the EU UCITS (Undertakings for Collective Investments in Transferable Securities) Directive and AIFM (Alternative Investment Fund Managers) Directive. Exchange-Traded Funds (ETFs) are also included and are classified the same way as conventional funds. The EFC is industry owned and governed without commercial bias. All professional industry stakeholders, fund managers, distributors, platforms, data vendors, national associations and policymakers can use the EFC results freely. The classification results can be used to build other applications on (ratings, …) or integrate into stakeholders own systems. The EFC is not targeted at retail investors.

Enables accurate cross-border fund comparison and peer analysis

By standardising fund categories across Europe, asset managers and investors can perform true apples-to-apples comparisons. This eliminates regional ambiguities and enhances benchmarking.

Improves fund transparency and accelerates European distribution

Providing clearly defined investment constraints and category groupings helps data users instantly understand a fund's strategy. This provides clarity, builds trust and investor-friendly European fund market.

Industry-owned, trusted quality tag

Regular monitoring, makes the classification a credible, consistent and trustworthy tool for screening across Europe. The EFC is managed collectively by the industry (EFAMA, fund groups, national associations) with no commercial influence.

Resources and References

OPEN

European Fund Classification

Learn more about the EFC and view latest statistics

OPEN

Download Classification Results

Downland the latest EFC classification results

OPEN

The EFC Categories

Review the EFC Categories brochure to understand the classification structure

OPEN

EFC Procedural Overview for Fund Managers

Downland the Procedural brochure to find out how the funds are classified

FAQs

What does the European Fund Classification (EFC) standard define?

How does the EFC relate to existing industry practices and regulations?

What is the difference between verified and indicative classifications?

What are Additional Categorisation Elements and structural flags?

What is the EFC Category Code and how can it be used?

Terms & Glossary

EFC (European Fund Classification)

A pan-European industry standard for classifying investment funds to facilitate cross-border comparison, transparency, and peer group analysis.

EFAMA (European Fund and Asset Management Association)

The representative association for the European investment management industry, which oversees and promotes the European Fund Classification standard.

CA (Classification Administrator)

Fund classifications are reviewed on a quarterly basis by the CA to monitor a fund’s adherence to the classification criteria. The classification process is done free of charge by FE fundinfo.

UCITS (Undertakings for Collective Investment in Transferable Securities)

A regulatory framework of the European Commission that creates a harmonized regime for the management and cross-border distribution of mutual funds across Europe.

AIFMD (Alternative Investment Fund Managers Directive)

A European Union directive that regulates alternative investment fund managers, covering funds outside the UCITS framework such as hedge funds, private equity, and real estate funds.

ARIS (Absolute Return and Investment Strategies)

An EFC asset class encompassing funds that utilize non-traditional investment strategies aiming to generate positive returns regardless of broader market conditions.

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