• AIMA & CAIA update risk rating guidelines for alternative strategies in Canada
• Now in its seventh edition, risk ratings guideline provide benchmark for dealers

AIMA and CAIA (‘the Associations’) have today published an updated risk rating system as a guideline for better alignment of internal risk ratings at investment dealer firms with the historical risk-adjusted returns of funds within indices.

In the past seven editions, risk category recommendations for hedge fund and private credit strategies have remained largely consistent. Other private market asset classes were added in 2025 and thus this edition marks the second year of their inclusion.

The AIMA and CAIA risk rating guideline remains an important reference as investment dealers in Canada place internal risk ratings on all investment funds. Often, non-prospectus public and private alternative funds are automatically rated as high risk, regardless of the actual risk/return metrics of a particular strategy or fund. Having an internal high-risk rating then limits the number of retail investors who can allocate to these products, and how much they can allocate.  

To facilitate Canadian retail investors’ fair access to strategies that can provide diversification, non-correlated returns and risk reduction through a variety of market conditions, the Associations advocate that internal dealer risk ratings systems should better align with historical risk-adjusted data from funds within indices, using this guide as a key reference.

The updated, comprehensive risk rating guidelines are available here.

Lauren Cooper, Director, Head of Canada, AIMA, commented: “AIMA and CAIA believe these risk rating guidelines provide valuable context for dealers and allocators in assigning internal risk ratings and evaluating alternative strategies. Alternatives play an important role in balanced portfolios, enhancing diversification, resilience, and return potential without necessarily increasing overall risk exposure. As their role continues to grow, aligning internal risk ratings to historical risk-adjusted performance within indices and to the specific strategy is essential to supporting fair investor access.”

Steven Novakovic, Managing Director, Educational Programs, CAIA Association, commented: "CAIA Association is once again delighted to partner with AIMA in producing well-constructed Risk Rating Guidelines. These guidelines are a valuable resource for any allocator and represent the prudence and care fostered by AIMA and CAIA when it comes to investing in alternatives.”