What do your risk levels mean?

Back to results

We grade each fund in relation to its risk against all other funds in our insured range. The rating is not an industry standard and it has no relevance or relationship to the fund risk ratings of other fund providers.

To help our investors decide which funds might be suitable for them, we divide them into the following six risk categories:

The fund price movements will generally be positive but could be negative, particularly in a low interest rate or inflationary environment. They’re particularly suited to short-term investment where stability is the main aim. Over the longer term, they’re unlikely to deliver high levels of return and returns may not keep pace with inflation.

The fund price movements will generally be positive but could be negative, particularly in a low interest rate or inflationary environment. Funds with a low risk rating may keep risk down in a variety of ways, for example by holding a very broad range of investments, or they may contain a narrower range of fixed interest or cash investments with a short term to maturity. Over the longer term, they’re unlikely to deliver high levels of return and may not keep pace with inflation.

They may hold a broad range of investment types, including equities (shares), but a significant proportion may also be invested in investments that aim to provide a reliable source of income (like government and corporate bonds) and, with that, greater stability than would typically be available from equities. They try to provide better long-term growth prospects than a cash deposit, but are lower risk than funds investing largely in equities.

Their daily price movements will therefore vary from day-to- day, both up and down, although not usually as much as for funds investing entirely in equities. These movements can lead to lengthy periods of negative returns depending on market conditions. However, over the longer term these funds would be expected to deliver significantly better growth prospects than a cash deposit.

This means that investors are completely exposed to the performance of that single investment type or region. These funds could experience lengthy periods of negative returns depending on market conditions. However, these funds can also rise in value quite significantly and have historically provided good long-term growth. Because of their narrow investment focus, they’re better suited to investors with at least five years to invest and to use in combination with other funds as part of a diversified portfolio.

They tend to invest in a single investment type or geographical region and these investment types (for example funds investing in commodity companies) and regions (for example emerging markets equities) have historically been more volatile (risky) than those in the ‘Above-average risk’ category. These funds have historically provided periods of positive returns but, because of their narrow investment focus, they’re better suited to investors with at least five years to invest and to use in combination with other funds as part of a diversified portfolio.