Your attitude to risk

Helping you choose the right funds.

For our savings plans, we offer a wide range of ILP sub-funds that allows you to make a selection aligned to your investment aims and your appetite for risk. Before investing, it’s important to establish your attitude to risk, understanding that the potential for a good return should be balanced against the fact that you might not get back all of your money.

Risk-reward relationship

You need to achieve a balance between risk and potential reward that you are comfortable with. The riskier the asset, the greater the potential for high returns, but with this comes a greater probability that you could lose some or all of your investment.

Higher risk assets offer a better chance of good returns over the medium to long-term, but with a lot more volatility. Lower risk investments such as fixed interest and cash mean less risk to your capital, but also less potential for achieving returns on your investment.

Risk rating

We allocate a ‘risk rating’ to each of our ILP sub-funds to help you decide if they are suitable for your aims and attitude to risk. There are five grades as follows:

  • Grade 1 – funds offering low risk but low potential returns, similar to money market rates
  • Grade 2 – low-risk funds offering security but with slightly higher potential for growth than cash funds
  • Grade 3 – these funds take a balanced approach to investment by holding a diverse portfolio of assets
  • Grade 4 – a more focused asset exposure provides good growth potential with the risk of short-term volatility
  • Grade 5 – these aggressive funds balance the risk of high volatility with the potential for high capital growth

Our factsheets (available in our interactive fund centre tool) show the risk rating for each ILP sub-fund, however we recommend that you discuss the specific risks associated with individual funds with your financial adviser before making any investment decisions.