Risk

  • Because risk is relative to each investor's tolerance level, we recommend that you consult your financial adviser to determine your attitude towards risk and the most appropriate investment strategy for you.

    Risk and you

    The role of the fund manager is to buy, sell and manage securities in accordance with the investment strategy of the fund in order to achieve the fund's stated investment objective.

    Managed funds and risk

    By their very nature, managed funds can reduce an investor's risk as they are managed by experienced investment managers who oversee the portfolios on a full-time basis.

    A managed fund can provide diversification through the investment in a portfolio of assets, so risk is dispersed amongst a number of different assets and depending on the investment objectives of the fund, across different geographical regions . This may make the fund less vulnerable to fluctuations in the value of the individual securities they invest in and therefore may reduce the investment risk to the investor.

    Information about risk

    As in every investment, there is an element of risk when investing in managed funds. To understand the potential risks of investing in a managed fund, we recommend that you read a managed fund's product disclosure statement, which documents its investment objectives and strategy and possible risks associated with that strategy.

    For more information on this subject we recommend that you consult your financial adviser.

    General Advice Warning

    This is general advice only and does not take into account your personal situation, goals or investment objectives.

    Before acting on this advice, you should consider the appropriateness of the advice in relation to your own situation. We recommend you speak to your financial adviser to determine what is appropriate for your goals, needs and objectives.

  • While all investments may carry some risk, there are a number of ways you can minimise the risk levels of your managed fund portfolio while creating the potential for strong returns.

    Professional Advice

    A financial adviser will take the time to understand your unique financial situation, your investment goals and your risk tolerance. To help mitigate risk and increase your portfolio's return potential, he or she may help you create a diversified portfolio and can set up a regular investment program that will deliver the benefits of dollar cost averaging.

    Diversification

    One of the best ways to minimise risk and increase return potential is to diversify your investments. Managed funds are ideal investment instruments as they allow an investor to diversify their investments across asset classes, sectors and regions.

    Regular Investing

    Another smart investment strategy is to invest in increments over a period of time. Regular investment plans are available on many managed funds. Regular investment plans invest a set amount of money, directly debiting money from your bank account, to purchase units in your managed fund. This allows you to dollar cost average your investment.

    Dollar cost averaging

    When the net asset value (NAV) of managed fund units is low, the amount invested will purchase more units than when the NAV is high. This can have the effect of reducing the average price paid for the units of a managed fund. While there are numerous benefits to dollar cost averaging, it is neither a guarantee for profit nor a protection against a loss in a continually declining market.

    Long-term investing

    Fluctuating markets can be challenging, investors adopting a long-term investment strategy will be better equipped to ride out any volatility of returns.

    Professional management

    Professional management can help to reduce risk by having a team of trained professionals managing your money on an ongoing basis.

    General Advice Warning

    This is general advice only and does not take into account your personal situation, goals or investment objectives.

    Before acting on this advice, you should consider the appropriateness of the advice in relation to your own situation. We recommend you speak to your financial adviser to determine what is appropriate for your goals, needs and objectives.

  • Measuring risk is a personal decision with no right or wrong answer. Some of your considerations might include:

    Focus: Is your overall goal capital preservation or appreciation?

    Timeframe: Successful investing is often based on time, not timing. How long do you plan to invest and is liquidity a consideration?

    Volatility: How comfortable would you be if your portfolio declined 10% or 20% in a short period of time? If you are uncomfortable with large fluctuations, you may want to consider investments with lower levels of low volatility.How long would you be comfortable holding investments experiencing a decrease in value?

    Returns: In general, the greater the risk, the higher the return potential.

    Securities: Bonds tend to be less volatile than equities, although equities may provide higher returns over time. Managed funds have different types of risk depending on the securities they own.

    Foreign exposure: Are you interested in investing in markets outside of Australia?

    Diversification: Investing across assets classes, geographic regions and market capitalisations can reduce risk and help you earn more consistent results over time.

    Investment history: Do past investment experiences influence your present situation?

    General Advice Warning

    This is general advice only and does not take into account your personal situation, goals or investment objectives.

    Before acting on this advice, you should consider the appropriateness of the advice in relation to your own situation. We recommend you speak to your financial adviser to determine what is appropriate for your goals, needs and objectives.

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