Risk Spectrum Diagram

The above table is a broad, generic indicator of the risk profile of the different types of collective investment scheme (CIS) funds. Please note that higher risk is not necessarily an indicator of higher return. It is important for investors and advisors to determine the risk – return profile of a specific portfolio and compare this with other portfolios in the category.

A meaningful comparison can only be achieved when comparing like with like, for example the risk-return profile of a domestic general equity fund with that of another domestic general equity fund. There are numerous different risk – return methodologies provided by statistics providers and asset consultants. These vary from simple measures of volatility to the measurement of downside risk. It is advisable for investors and advisors not to rely on any one indicator, but to use them in conjunction with each other and to ensure that they understand what a particular methodology attempts to indicate. There are a number of statistics providers that measure the risk-return profiles of CIS funds and your financial adviser will be able to provide you with this information.