When performing filtering operations over the RadGridView, IValueConverters are used for presentation purposes only. They play no part in the filtering mechanism and filtering would always be performed on the raw data values. You should be careful when using converters in order to avoid duplication of the content in the list of distinct values to filter on.
The GridViewColumn has a property called FilterMemberPath. You can use this property to tell the column to filter on a property different from the one it displays in its cells. In case the Type of the bound property cannot be automatically discovered by the data engine, you can “help” the column by setting the FilterMemberType property.
You can also check the FilterMemberPath documentation.
Grouping, on the other hand, would respect the converted values and duplicated groups would not be created.