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GUIDE TO
INVESTOR RISK
PROFILES
Financial Advice Centre Ltd
Risk profile descriptions
Profile 1 – No investment risk
You are extremely risk averse with no tolerance to investment risk.
You probably worry more than most people about the possibility of poor investment outcomes
and will usually suffer from severe regret if investment decisions turn out badly. You are not
comfortable with taking any investment risk and ensuring all of your capital is safe is your
main priority. You want the potential to earn interest on your savings and in normal
circumstances would expect to get a full return of your capital. You accept that any returns
are unlikely to keep pace with inflation, so your money is likely to be worth less in real terms
in the future.
Likely assets:
You are likely to save all your money in cash deposits or similar.
Likely
capital
gains / losses:
This is solely contained as Cash and, therefore, returns would reflect
investment performance. Losses would be inapplicable as all capital
would be guaranteed (subject to FSCS guarantee levels).
Typical Benchmark return 2.5% per annum over a 10 year period
(This benchmark is an estimation of the returns that can be created in certain market
conditions and therefore should not be viewed as a ‘guaranteed return’ for this risk rating)
Asset allocation for Quarter Four 2012 Rolling 12 Months
Cash/Money Markets
100%
Bond/Gilts/Property
Fixed Interest
0%
Equities
0%
In depth asset allocation
Cash – 100%
Gilts and Investment grade bonds – Nil
Corp Bonds -Nil
High Yield &
Emerging Market bonds – Nil
Property – Nil
UK Equity (Low Volatility) – Nil
UK Equity (High Volatility) – Nil
Overseas Equity– Nil
Emerging Market
Equity – Nil
Profile 2 – Risk averse
You are risk averse with a very low tolerance to investment risk.
You probably worry more than most people about the possibility of poor investment outcomes
and will usually suffer from severe regret if investment decisions turn out badly. You are only
prepared to take a very small amount of investment risk over the medium to long term and
ensuring preservation of your capital is very important to you. You want the potential to obtain
modest returns, but accept that the likelihood of growth above inflation is very limited, so your
money may be worth less in real terms in the future. You accept that your investments may
rise and fall in value, generally only by a small amount, but that small losses may occur.
Likely assets:
You are likely to invest the vast majority of your money in a combination
of cash and low risk assets, with the vast majority in cash. The
remainder of your money could be held in equities, with the vast
majority in developed markets and very limited exposure to emerging
markets.
Likely
capital
gains / losses:
A Risk Averse portfolio invested over a 3 year period the portfolio
would, during its worst 3 months have lost 14.3% (between 01/09/2008
– 30/11/2008). The best 3 month period would shown a portfolio gain of
15.9% (01/04/2009 – 30/06/2009).
(Source: Standard Life WRAP Risk Averse Portfolio)
This area can also be tailored to meet yields required for clients taking small amounts of
Income from their Investments.
Typical Benchmark return 3% per annum over a 10 year period
(This benchmark is an estimation of the returns that can be created in certain market
conditions and therefore should not be viewed as a ‘guaranteed return’ for this risk rating)
Asset allocation for Quarter Four 2012
- Rolling 12 Months
Cash/Money Markets
20%
Bond/Gilts/Property
Fixed Interest
80%
Equities
0%
In depth asset allocation
Cash – 20%
Gilts and Investment grade bonds – 30%
Corp Bonds -30%
High Yield &
Emerging Market bonds – 10%
Property – 10%
UK Equity (Low Volatility) – Nil
UK Equity (High Volatility) – Nil
Overseas Equity– Nil
Emerging Market
Equity – Nil
Profile 3 – Very cautious
You have a very cautious approach to investment risk.
You probably worry more than most people about the possibility of poor investment outcomes
and will usually suffer from regret if investment decisions turn out badly. You are only
prepared to take a small amount of investment risk over the medium to long term and
ensuring preservation of your capital is important to you. You want the potential to match or
beat inflation; in order to achieve this potential you accept that your investments may rise and
fall in value fairly frequently, generally only by relatively small amounts, but that small losses
may occur.
Likely assets:
You are likely to invest the majority of your money in a combination of
cash and low risk assets, with the majority in fixed income funds or
similar. The remainder of your money could be held in property and
equities, with the majority of equity funds in developed markets and
limited exposure to emerging markets.
Likely
capital
gains / losses:
A Very Cautious risk portfolio invested over a 3 year period the portfolio
would, during its worst 3 months have lost 17.4% (between 01/09/2008
– 30/11/2008). The best 3 month period would shown a portfolio gain of
14.0% (between 01/07/2009 – 30/09/2009).
(Source: Standard Life WRAP Very Cautious Portfolio)
This area can also be tailored to meet yields required for clients taking small amounts of
Income from their Investments.
Typical Benchmark return 4%
(This benchmark is an estimation of the returns that can be created in certain market
conditions and therefore should not be viewed as a ‘guaranteed return’ for this risk rating)
Asset allocation for Quarter Four 2012
- Rolling 12 Months
Cash/Money Markets
15%
Bond/Gilts/Property
Fixed Interest
65%
Equities
20%
In depth asset allocation
Cash – 15%
Gilts and Investment grade bonds – 20%
Corp Bonds -25%
High Yield &
Emerging Market bonds – 10%
Property – 10%
UK Equity (Low Volatility) – 10%
UK Equity (High Volatility) – Nil
Overseas Eq– 10%
Emerging Market
Equity – Nil
Profile 4 – Cautious
You have a cautious approach to investment risk.
You probably worry more than most people about the possibility of poor investment outcomes
and will usually suffer from regret if investment decisions turn out badly. You are prepared to
take some investment risk over the medium to long term, but ensuring preservation of your
capital is still important to you. You want the realistic potential to match or beat inflation; in
order to achieve this potential you accept that your investments may rise and fall in value
fairly frequently, generally only by relatively small amounts, but that modest losses may occur.
Likely assets:
You are likely to invest all of your money in a combination of low risk
and equity assets, with the majority in fixed income funds or similar.
The remainder of your money could be held in property and equities,
with the majority of equity funds in developed markets, but with some
exposure to emerging markets.
Likely
capital
gains / losses:
A Cautious risk portfolio invested over a 3 year period the portfolio
would, during its worst 3 months have lost 18.0% (between 01/09/2008
– 30/11/2008). The best 3 month period would shown a portfolio gain of
14.3% (between 01/07/2009 – 30/09/2009).
(Source: Standard Life WRAP Risk Averse Portfolio)
This area can also be tailored to meet yields required for clients taking small amounts of
Income from their Investments.
Typical Benchmark return 5%
(This benchmark is an estimation of the returns that can be created in certain market
conditions and therefore should not be viewed as a ‘guaranteed return’ for this risk rating)
Asset allocation for Quarter Four 2012
- Rolling 12 Months
Cash/Money Markets
10%
Bond/Gilts/Property
Fixed Interest
55%
Equities
30%
In depth asset allocation
Cash – 10%
Gilts and Investment grade bonds – 15%
Corp Bonds -20%
High Yield &
Emerging Market bonds – 15%
Property – 10%
UK Equity (Low Volatility) – 10%
UK Equity (High Volatility) – 5%
Overseas Eq- 10%
Emerging Market
Equity – 5%
Profile 5 – Moderately cautious
You have a moderately cautious approach to investment risk.
Like most people, you probably worry about the possibility of poor investment outcomes, but
don’t tend to dwell on any investment decisions that turn out badly. You are prepared to take
a modest amount of investment risk over the medium to long term and growth potential is
equally as important as ensuring preservation of capital. You want the realistic potential for
growth above inflation; in order to achieve this potential you accept that your investments may
rise and fall in value frequently, by more than a small amount and that moderate losses may
occur.
Likely assets:
You are likely to invest all of your money in a combination of low risk
and equity assets, with the majority in fixed income funds or similar, but
with significant amounts in property and equities. Your equity funds are
likely to focus on developed markets, but with some exposure to
emerging markets.
Likely
capital
gains / losses:
A Moderately Cautious risk portfolio invested over a 3 year period the
portfolio would, during its worst 3 months have lost 17.5% (between
01/09/2008 – 30/11/2008). The best 3 month period would shown a
portfolio gain of 16.7% (between 01/07/2009 – 30/09/2009).
(Source: Standard Life WRAP Risk Averse Portfolio)
This area can also be tailored to meet yields required for clients taking small amounts of
Income from their Investments.
Typical benchmark return 6%
(This benchmark is an estimation of the returns that can be created in certain market
conditions and therefore should not be viewed as a ‘guaranteed return’ for this risk rating)
Asset allocation for Quarter Four 2012
- Rolling 12 Months
Cash/Money Markets
8%
Bond/Gilts/Property
Fixed Interest
52%
Equities
40%
In depth asset allocation
Cash – 8%
Gilts and Investment grade bonds – 8%
Corp Bonds -16%
High Yield &
Emerging Market bonds – 18%
Property – 10%
UK Equity (Low Volatility) – 15%
UK Equity (High Volatility) – 10%
Overseas Eq– 10%
Emerging Market
Equity – 5%
Profile 6 – Moderate
You have a moderate tolerance to investment risk.
You probably worry slightly less than most people about the possibility of poor investment
outcomes and don’t tend to regret poor investment decisions. You are prepared to take a
moderate amount of investment risk over the medium to long term and ensuring preservation
of capital is less important to you than growth potential. You want the realistic potential for
growth above inflation; in order to achieve this potential you accept that your investments may
rise and fall in value frequently, occasionally by a significant amount and that moderate losses
may occur.
Likely assets:
You are likely to invest all of your money in a combination of low risk
and property/equity assets, in roughly equal proportions. You are likely
to invest in fixed income funds or similar, alongside property and equity
funds. Your equity funds are likely to be in developed markets, but with
moderate exposure to emerging markets.
Likely
capital
gains / losses:
A Moderate risk portfolio invested over a 3 year period the portfolio
would, during its worst 3 months have lost 17.5% (between 01/09/2008
– 30/11/2008). The best 3 month period would shown a portfolio gain of
16.7% (between 01/07/2009 – 30/09/2009).
(Source: Standard Life WRAP Risk Averse Portfolio)
This area can also be tailored to meet yields required for clients taking larger amounts of
Income from their Investments.
Typical benchmark return 7%
(This benchmark is an estimation of the returns that can be created in certain market
conditions and therefore should not be viewed as a ‘guaranteed return’ for this risk rating)
Asset allocation for Quarter Four 2012
- Rolling 12 Months
Cash/Money Markets
5%
Bond/Gilts/Property
Fixed Interest
40%
Equities
55%
In depth asset allocation
Cash –5%
Gilts and Investment grade bonds – 6%
Corp Bonds -12%
High Yield &
Emerging Market bonds – 14%
Property – 8%
UK Equity (Low Volatility) – 15%
UK Equity (High Volatility) – 15%
Overseas Eq– 15%
Emerging Market
Equity – 10%
Profile 7 – Moderately adventurous
You have a moderately high tolerance to investment risk.
You worry less than most people about the possibility of poor investment outcomes and
accept that occasional poor returns are a necessary part of long-term investment. You are
prepared to take a moderately high level of investment risk over the medium to long term and
ensuring preservation of capital is less important to you than growth potential. You want the
realistic potential for growth significantly above inflation; in order to achieve this potential you
accept that your investments are quite likely to rise and fall in value frequently and
significantly and that relatively large losses may occur.
Likely assets:
You are likely to invest all of your money in a combination of low risk
and property/equity assets, with a slight majority in property and
equities. You are likely to invest in fixed income funds or similar,
alongside property and equity funds. Your equity funds are likely to be
in developed markets, but with significant exposure to emerging
markets.
Likely
capital
gains / losses:
A Moderately Adventurous risk portfolio invested over a 3 year period
the portfolio would, during its worst 3 months have lost 17.5% (between
01/09/2008 – 30/11/2008). The best 3 month period would shown a
portfolio gain of 16.7% (between 01/07/2009 – 30/09/2009).
(Source: Standard Life WRAP Risk Averse Portfolio)
This area can also be tailored to meet yields required for clients taking larger amounts of
Income from their Investments.
Typical benchmark return 8%
(This benchmark is an estimation of the returns that can be created in certain market
conditions and therefore should not be viewed as a ‘guaranteed return’ for this risk rating)
Asset allocation for Quarter Four 2012
- Rolling 12 Months
Cash/Money Markets
5%
Bond/Gilts/Property
Fixed Interest
30%
Equities
65%
In depth asset allocation
Cash –5%
Gilts and Investment grade bonds – 6%
Corp Bonds -12%
High Yield &
Emerging Market bonds – 12%
Property – Nil
UK Equity (Low Volatility) – 15%
UK Equity (High Volatility) – 20%
Overseas Eq– 15%
Emerging Market
Equity – 15%
Profile 8 – Adventurous
You have an adventurous approach to investment risk.
You worry much less than most people about the possibility of poor investment outcomes and
accept that periodic poor returns are a necessary part of long-term investment. You are
prepared to take a high level of investment risk over the medium to long term and ensuring
preservation of capital is much less important to you than growth potential. You want the
realistic potential for growth significantly above inflation; in order to achieve this potential you
accept that your investments are quite likely to rise and fall in value frequently and
significantly and that large losses may occur.
Likely assets:
You are likely to invest all of your money in a combination of low risk
and property/equity assets, with the majority in property and equities.
You are likely to invest in fixed income funds or similar, alongside
property and equity funds. Your equity funds are likely to be in
developed markets, but with significant exposure to emerging markets.
Likely
capital
gains / losses:
An Adventurous risk portfolio invested over a 3 year period the portfolio
would, during its worst 3 months have lost 21.7% (between 01/09/2008
– 30/11/2008). The best 3 month period would shown a portfolio gain of
20.5% (between 01/07/2009 – 30/09/2009).
(Source: Standard Life WRAP Risk Averse Portfolio)
This area can also be tailored to meet yields required for clients taking larger amounts of
Income from their Investments.
Typical benchmark return 10%
(This benchmark is an estimation of the returns that can be created in certain market
conditions and therefore should not be viewed as a ‘guaranteed return’ for this risk rating
Asset allocation for Quarter Four 2012
- Rolling 12 Months
Cash/Money Markets
3%
Bond/Gilts/Property
Fixed Interest
22%
Equities
75%
In depth asset allocation
Cash –3%
Gilts and Investment grade bonds – Nil
Corp Bonds -8%
High Yield &
Emerging Market bonds – 14%
Property – Nil
UK Equity (Low Volatility) – 10%
UK Equity (High Volatility) – 25%
Overseas Eq– 20%
Emerging Market
Equity – 20%
Profile 9 – Highly adventurous
You have a highly adventurous approach to investment risk.
You worry much less than most people about the possibility of poor investment outcomes and
accept that periodic poor returns are a necessary part of long-term investment. You are
prepared to take a very high level of investment risk over the medium to long term and
ensuring preservation of capital is not a significant concern for you. You want the realistic
potential for a very high return on your capital and are willing to take investment risk with
most, if not all, of your capital in order to achieve this potential. You accept that your
investments are likely to rise and fall in value frequently and significantly and that very large
or even total losses may occur.
Likely assets:
You are likely to invest all of your money in a combination of low risk
assets and property/equity assets, with the vast majority in property and
equities. You are likely to invest in fixed income funds or similar,
alongside some property and equity funds. Your equity funds are likely
to be in developed markets, but with significant exposure to emerging
markets
Likely
capital
gains / losses:
A Highly Adventurous portfolio invested over a 3 year period the
portfolio would, during its worst 3 months have lost 23.9% (between
01/09/2008 – 30/11/2008). The best 3 month period would shown a
portfolio gain of 21.9% (between 01/07/2009 – 30/09/2009).
(Source: Standard Life WRAP Risk Averse Portfolio)
This area can also be tailored to meet yields required for clients taking larger amounts of
Income from their Investments.
Typical benchmark return 11%
(This benchmark is an estimation of the returns that can be created in certain market
conditions and therefore should not be viewed as a ‘guaranteed return’ for this risk rating)
Asset allocation for Quarter Four 2012
- Rolling 12 Months
Cash/Money Markets
2%
Bond/Gilts/Property
Fixed Interest
13%
Equities
85%
In depth asset allocation
Cash – 2%
Gilts and Investment grade bonds – Nil
Corp Bonds -5%
High Yield &
Emerging Market bonds –8%
Property –Nil
UK Equity (Low Volatility) – 10%
UK Equity (High Volatility) – 35%
Overseas Eq– 10%
Emerging Market
Equity – 30%
Profile 10 – Speculative
You have a speculative approach to investment risk.
You are not concerned about the possibility of poor investment outcomes and even enjoy the
‘thrill’ of making more risky investment decisions. You are prepared to take a very high level
of investment risk over the medium to long term and ensuring preservation of capital is not a
concern for you. You want the realistic potential for a very high return on your capital and are
willing to take considerable amounts of risks with most, if not all, of your capital in order to
achieve this potential. You accept that your investments are likely to rise and fall in value
frequently and significantly and that very large or even total losses may occur.
Likely assets:
You are likely to invest all of your money in equities, with the majority
held in developed markets, but with significant exposure to emerging
markets.
Likely
capital
gains / losses:
A Speculative risk portfolio invested over a 3 year period the portfolio
would, during its worst 3 months have lost 25.1% (between 01/09/2008
– 30/11/2008). The best 3 month period would shown a portfolio gain of
22.1% (between 01/07/2009 – 30/09/2009).
(Source: Standard Life WRAP Risk Averse Portfolio)
This area can also be tailored to meet yields required for clients taking larger amounts of
Income from their Investments.
Typical benchmark return 12%
(This benchmark is an estimation of the returns that can be created in certain market
conditions and therefore should not be viewed as a ‘guaranteed return’ for this risk rating)
Asset allocation for Quarter Four 2012
- Rolling 12 Months
Cash/Money Markets
1%
Bond/Gilts/Property
Fixed Interest
Nil
Equities
99%
In depth asset allocation
Cash – 1%
Gilts and Investment grade bonds – Nil
Corp Bonds -Nil
High Yield &
Emerging Market bonds –Nil
Property –Nil
UK Equity (Low Volatility) – 15%
UK Equity (High Volatility) – 40%
Overseas Eq– 14%
Emerging Market
Equity – 30%