We aim to achieve returns in excess of the Consumer Price Index (CPI) over a five to seven-year investment cycle. In order to assist investors to understand how much risk may be taken by each fund, we link each fund to a Distribution Technology risk level. These levels specify the upper expected volatility limit within which the fund will be managed.
Such funds are managed below upper risk limits with no lower risk limit. We are free to reduce risk if we think it is prudent to do so. When managing each fund, we take account of the expected volatility of the asset classes we use and ensure that these remain below an upper volatility limit.
The information below sets out a description of each DT risk level and the target CPI+ rate of return. A is the lowest level of risk and E is the highest.
This risk level is designed for those investors who are seeking steady returns from their investment and are prepared to take only a small amount of risk. They will be viewing their investment over the medium to long-term in order to achieve their goal but will accept that there may be some fluctuations in value over the short -term. Underlying assets at this level will include a greater exposure to fixed interest than equities or other assets.
Investors selecting this risk level will be relatively cautious but will be seeking a reasonable return from their investment. They will be prepared to take a moderate amount of risk over the medium to long term, but will be prepared for fairly frequent fluctuations in value. The underlying assets at this level may have an equal exposure to fixed interest as to equities and other assets.
A fund with this level of risk is designed for those investors who have a balanced approach. They will be seeking potentially higher long-term returns for which they understand there will be a higher level of risk. These investors will be prepared to accept fluctuations in the value of their investment which may be frequent and potentially significant in value. This risk level is likely to have a greater exposure to equities and other assets rather than fixed interest.
Investors selecting this risk level will have expectations of higher long-term returns from their investment for which they will be prepared for not only significant fluctuations in value but potentially sustained periods of underperformance. The underlying assets at this level of risk will have a fairly low exposure to fixed interest against equities and other assets.
This risk level is designed for those investors who are seeking the highest long-term returns from their investment for which they are comfortable with the widest range of fluctuations in value. These investors will be prepared for frequent and at times, sustained periods of poor performance over the short to medium term. The underlying assets at this level will have exposure predominantly to equities and other assets with only a very low exposure to fixed interest.