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The Canadian Investment Funds Standards Committee (CIFSC) and the Alternative Investment Management Association in Canada (AIMA Canada) announced on Monday that the CIFSC is introducing a new approach to categorizing alternative funds that uses five separate groups, replacing the broad “alternative” category that was previously in use.

The five new alternative categories are equity focused, credit focused, multi-strategy, market neutral and other. They aim to help advisors and investors more easily compare funds and assess the performance of different alternative investing strategies.

“This is a pivotal step forward in helping make alternatives a more mainstream choice for investors and advisors, who will now be able to make meaningful fund comparisons across different types of alternative strategies,” Belle Kaura, chair of AIMA Canada, said in a statement.

“The creation of specific categories of alternatives seeks to ensure consistent and rational categorization by grouping analogous investment strategies with similar risk-return profiles, allowing for effective peer evaluation,” Kaura added.

The alt fund market is expected to flourish in the wake of the adoption of a new regulatory framework earlier this year that modernized the sector’s rules. AIMA Canada said it intends to work with the CIFSC to expand the alternative categories further in the future as the alternative investment market grows.