The European Fund and Asset Management Association (EFAMA) has issued research that shows that the European Fund Classification's free to use, industry-developed project, is just as effective, particularly for UCITS finds, than any paid for services. 

EFAMA released today a new issue of its Market Insights series titled “The European Fund Classification (EFC) - A robust standard suitable for asset managers and policymakers”. This publication provides a comprehensive evaluation of the EFC and its value as a reliable, industry-led standard for classifying investment funds.

The EFC is the only fund classification system owned and governed entirely by the asset management industry. It classifies funds based on actual portfolio holdings rather than marketing labels, it’s free of charge and designed to ensure "objectivity, transparency and comparability across investment products'" EFAMA said.

This new report puts the EFC classification to the test by assessing whether it groups funds into representative peer groups that exhibit consistent performance characteristics and align with empirical expectations in financial markets.

Among the findings inside the report saw the EFC labelled the most inclusive classification system for UCITS, including over 43,000 funds or 200,000 share classes based on transparent portfolio-driven criteria. The EFC is also "highly adaptable" for industry and regulatory use as it integrates a wide set of data attributes.

Clarity

Vera Jotanovic, Senior Economist at EFAMA, commented: “Our analysis confirms that the EFC is a reliable and consistent classification framework. By effectively grouping funds with similar characteristics and preserving widely observed market patterns, the EFC empowers investors, asset managers and policymakers alike with greater transparency and analytical precision. This kind of clarity is essential in today’s fast-evolving financial landscape.”

Tanguy van de Werve, Director General at EFAMA, added: “The European Fund Classification is a cornerstone of market transparency and investor protection. As an industry-owned and maintained standard, it strengthens the foundations for evidence-based policy, informed supervision, and efficient capital markets. We encourage further adoption and recognition of the EFC framework across Europe to enhance consistency in fund reporting and product assessment.”