YOUR GUIDE TO HOW WE RISK RATE OUR FUNDS

Transcription

1 For Athora Ireland customers YOUR GUIDE TO HOW WE RISK RATE OUR FUNDS We re introducing a new approach to how we risk rate funds. The use of our new risk rating methodology in all our funds will begin with the release of our Quarter 4 fund factsheets. This approach to risk rating is broadly based on guidelines issued by the European Securities and Markets Authority (ESMA) but with some differences, which we explain later. SUMMARY OF OUR NEW RISK RATING APPROACH Funds are rated on a seven point scale, going from Very low risk to Very high risk. A fund s volatility over the previous five years (or a shorter period if a five-year performance track record isn t available) is calculated and a fund is then categorised into an appropriate risk rating scale. The table below shows the rating scale and the corresponding volatility band. We review the risk ratings of each of our funds yearly. Please note that we re only changing the way in which we assess and display our fund risk ratings. The objective of each fund remains unchanged. Scale Volatility bands 0-0.5% 0.5-2% 2-5% 5-10% 10-15% 15-25% 25% + Risk rating Very low risk Low risk Low to medium risk Medium to high risk High risk Very high risk Return aim In line with deposits In line with or slightly better than deposits Excess of deposits and possibly beats inflation Average returns and higher than deposit rates or inflation Above average returns and higher than deposits or inflation Significantly higher than deposits and inflation with high return potential over the long term The highest return potential over the long term A table at the end of this document shows the risk ratings of our funds published in our Quarter 3 fund factsheets, which was the last time the old methodology was used. This table also shows the risk rating of each fund based on our new risk rating methodology. WHAT S VOLATILITY? Volatility is a measure of how a fund s value fluctuates over time. A fund whose value has changed a lot would have a higher calculated volatility. The measure is often used to refer to how uncertain the return on a fund has been.

2 IMPORTANT FEATURES OF OUR RISK RATING APPROACH Our risk rating is based only on historic data and future volatility could differ for a number of reasons. A fund s risk rating shouldn t be relied on to indicate whether a fund is suitable for you or not. Your risk appetite will also be affected by factors such as your savings needs, your financial circumstances and how long you have to save. For advice as to whether a fund is suitable for you, please speak to your financial adviser. As with any type of investment, the value can fall as well as rise and isn t guaranteed. You could get back less than you invest and there s no guarantee that fund objectives will be met. In particular, there are specific risks such as liquidity which our new risk rating approach doesn t capture. For example, certain funds can be suspended and it may not be possible to sell units at this time. Other risks not specifically captured are counterparty risk or the risk of default. This could be the risk that a company such as a bank or building society, can t meet is liabilities and the amount you get back could be less than that invested. Further details are provided under the Risks which aren t taken into account in our risk ratings section below. It s also important to note that a fund s risk rating can change over time. For example it can move between volatility bands as the calculated historic volatility will vary over time, and factsheets will be updated if required, when a yearly review of risk ratings has been completed. DIFFERENCES TO THE ESMA APPROACH The approach to risk rating is broadly based on the ESMA approach. The key differences between this and our new approach include: The ESMA guidelines apply to Undertakings for Collective Investment in Transferable Securities (UCITs) funds which don t invest directly in property. We use our approach for all of our funds including those which invest directly in property. The ESMA guidelines don t rely solely on historic volatility for all funds, for example absolute return funds and funds which have objectives such as targeting a specific level of risk. We use our approach on all our funds including these types of funds. Further detail on the ESMA guidelines is available by referring to the following document published by ESMA: RISKS WHICH AREN T TAKEN INTO ACCOUNT IN OUR RISK RATINGS Credit risk A fund may invest in bonds or other types of debt. Bonds are essentially loans to companies, governments or local authorities so there s a risk that these companies or government bodies may default on the loan. Bonds are rated in terms of quality, usually from AAA downwards in letter grades. AAA is the highest quality and therefore the least likely to default and lower grades have increased vulnerability to default. Where we have it, we ll show the credit quality of the loans held by this fund in the Where the fund invests section of the appropriate fund factsheet. Currency risk If a fund invests overseas its value will go up and down in line with changes in currency exchange rates. This could be good for the fund or bad, particularly if exchange rates are volatile. Property risk If a fund invests in property, there s a risk you may not be able to cash in your investment when you want to. We may have to delay your payment for up to 12 months if market conditions make it hard for the manager of the fund to sell properties at a fair price. You should also be aware that property funds can experience larger Page 2 of 10

3 short-term price movements (up or down) than other types of fund, either due to changes in valuations (which are a matter of an independent valuer s opinion rather than fact) or as a result of a change in the valuation basis. As a result, property may be better suited for long-term investment of at least five years. Third-party risk In the event that the underlying investments which the fund invests in suspend trading, we may defer trading and/or payment to investors. The value payable will depend on the amount we receive or expect to receive from the underlying investments. Interest-rate risk Interest rate changes could affect the value of bond investments. Where long-term interest rates rise, the value of bonds are likely to fall, and vice versa. Derivative risk Some of our funds may use derivatives in a number of ways to achieve its objectives. Derivatives are an arrangement or product - such as a future, option, or warrant whose value derives from and is dependent on the value of an underlying asset, such as a commodity, currency, or security. It allows a manager to buy or sell an investment at a specified future date for a specified price. However, this means the fund could be exposed to additional risks if the market moves up when the manager expected it to go down or vice versa. If you have any questions about the changes or the funds you re invested in, please speak to your financial adviser. Page 3 of 10

4 REVISED AND PREVIOUS RISK RATINGS FOR OUR FUNDS The table below shows each fund s rating along with its rating under the previous rating approach. Fund name Aegon International 40/60 Core Portfolio v1 Series A Aegon International 50/50 Core Portfolio v1 Aegon International 50/50 Core Portfolio (Series B) Below average Below average Below average at Quarter 4 Aegon International 60/40 Core Portfolio v1 Below average Aegon International 60/40 Core Portfolio (Series B) Below average Aegon International 60/40 Core Portfolio (Series C) Below average Aegon International 70/30 Core Portfolio v1 Low Aegon International 70/30 Core Portfolio (Series B) Low Aegon International 70/30 Core Portfolio (Series C) Low Aegon International 80/20 Core Portfolio v1 Low Low to medium risk Aegon International 80/20 Core Portfolio (Series B) Low Low to medium risk Aegon International 80/20 Core Portfolio (Series C) Low Low to medium risk Aegon International Adventurous Select Portfolio Above average Aegon International Adventurous Select Portfolio (Series B) Above average Aegon International Euro Cash B Minimal Very low risk Aegon International Aberdeen Asia Pacific Equity Aegon International Aberdeen Asia Pacific Equity (Series B) Aegon International Aberdeen Emerging Markets Aegon International Aberdeen Emerging Markets (Series B) (Closed to new investors) Aegon International Absolute Insight Equity Market Neutral Low Low risk Aegon International Absolute Insight Equity Market Neutral Low Low risk (Series B) Aegon International Artemis Income Above average Aegon International Artemis Income (Series B) Above average Aegon International Artemis UK Special Situations Above average High risk Aegon International Artemis UK Special Situations (Series B) Above average High risk Aegon International Axa Framlington American Growth Above average High risk Aegon International Axa Framlington American Growth (Series B) Above average High risk Aegon International Axa Framlington UK Selected Opportunities Above average High risk Aegon International Baillie Gifford Balanced Managed Average Aegon International Baillie Gifford Balanced Managed (Series B) Average Aegon International Baillie Gifford International Above average Page 4 of 10

5 at Quarter 4 Aegon International Baillie Gifford International (Series B) Above average Aegon International Baillie Gifford Stockmarket Managed Above average Aegon International Baillie Gifford Stockmarket Managed (Series B) Above average Aegon International BGI Tracker 1 Below average Aegon International BGI Tracker 2 Below average Aegon International BGI Tracker 3 Below average Aegon International BlackRock Balanced Managed Average Aegon International BlackRock Balanced Managed (Series B) Average Aegon International Emerging Markets Equity Tracker High risk Aegon International Emerging Markets Equity Tracker (Series B) High risk Aegon International BlackRock European Dynamic Above average High risk Aegon International BlackRock European Dynamic (Series B) Above average High risk ) Aegon International BlackRock Gold and General Very high risk Aegon International BlackRock Gold and General (Series B) Very high risk Aegon International BlackRock UK Special Situations Above average High risk Aegon International BlackRock UK Special Situations (Series B) Above average High risk Aegon International BlackRock UK Above average Aegon International BlackRock UK Absolute Alpha Below average Aegon International BlackRock UK Absolute Alpha (Series B) Below average Aegon International BlackRock UK (Series B) Above average Aegon International Fidelity European Above average Aegon International Fidelity European (Series B) Above average Aegon International Fidelity MoneyBuilder Income Below average Low to Aegon International Fidelity MoneyBuilder Income (Series B) Below average Low to Aegon International Fidelity Asia Aegon International Fidelity Asia (Series B) Aegon International Stewart Investors Asia Pacific Leaders Aegon International Stewart Investors Asia Pacific Leaders (Series B) Aegon International Man GLG Balanced Managed Average Aegon International Man GLG Balanced Managed (Series B) Average Aegon International Man GLG Japan CoreAlpha Above average High risk Aegon International Man GLG Japan CoreAlpha (Series B) Above average High risk Aegon International Man GLG Stockmarket Managed Above average Aegon International Man GLG Stockmarket Managed (Series B) Above average Aegon International Henderson Cautious Managed Below average Aegon International Henderson Cautious Managed (Series B) Below average Aegon International Henderson Emerging Markets Opportunities (Series B) Aegon International Henderson Emerging Markets Opportunities Page 5 of 10

6 Aegon International Henderson European Selected Opportunities Above average at Quarter 4 Aegon International Henderson Strategic Bond Below average Low to medium risk Aegon International Henderson Strategic Bond (Series B) Below average Low to medium risk Aegon International Henderson UK Absolute Return Below average Low to medium risk Aegon International Henderson UK Absolute Return (Series B) Below average Low to medium risk Aegon International Invesco Perpetual Balanced Managed Average Aegon International Invesco Perpetual Balanced Managed (Series B) Average Aegon International Invesco Perpetual Asian Aegon International Invesco Perpetual Asian (Series B) Aegon International Invesco Perpetual Corporate Bond Below average Low to Aegon International Invesco Perpetual Corporate Bond (Series B) Below average Low to Aegon International Invesco Perpetual Income Above average Aegon International Invesco Perpetual Income (Series B) Above average Aegon International Invesco Perpetual Stockmarket Managed Above average Aegon International Invesco Perpetual Stockmarket Managed Above average (Series B) Aegon International Investec Asia ex Japan Aegon International Investec Asia ex Japan (Series B) Aegon International Investec Cautious Managed Below average Aegon International Investec Cautious Managed (Series B) Below average Aegon International JPMorgan Emerging Markets High risk Aegon International JPMorgan Emerging Markets (Series B) High risk Aegon International JPMorgan Global (ex-uk) Bond Below average Low to medium risk Aegon International JPMorgan Global (ex-uk) Bond (Series B) Below average Low to medium risk Aegon International JPMorgan Natural Resources High risk Aegon International JPMorgan Natural Resources (Series B) High risk Aegon International JPMorgan US Above average High risk Aegon International JPMorgan US (Series B) Above average High risk Aegon International Jupiter European Special Situations Above average Aegon International Jupiter European Special Situations (Series B) Above average Aegon International Jupiter Japan Income Above average High risk Aegon International Jupiter Japan Income (Series B) Above average High risk Aegon International Kames Enhanced Corporate Bond Below average Low to medium risk Aegon International Kames Enhanced Corporate Bond (Series B) Below average Low to medium risk Aegon International Kames Ethical Corporate Bond Below average Low to medium risk Aegon International Kames Ethical Corporate Bond (Series B) Below average Low to medium risk Aegon International Kames High Yield Bond Above average Low to medium risk Aegon International Kames High Yield Bond (Series B) Above average Low to medium risk Aegon International Kames Investment Grade Bond Below average Low to medium risk Aegon International Kames Investment Grade Bond (Series B) Below average Low to medium risk Aegon International Kames Sterling Corporate Bond (Series B) Below average Low to medium risk Page 6 of 10

7 at Quarter 4 Aegon International Kames Sterling Corporate Bond Below average Low to medium risk Aegon International Kames UK Smaller Companies Above average Aegon International Kames UK Smaller Companies (Series B) Above average Aegon International Lazard Emerging Markets Aegon International Lazard Emerging Markets (Series B) Aegon International Lazard European Alpha Above average Aegon International Lazard European Alpha (Series B) Above average Aegon International Lazard Managed Equity Above average Aegon International Lazard Managed Equity (Series B) Above average Aegon International Lazard UK Alpha Above average Aegon International Lazard UK Alpha (Series B) Above average Aegon International Legal & General UK Property Below average Aegon International Legal & General UK Property (Series B) Below average Very high risk Aegon International London & Capital Multi Strategy Low Aegon International London & Capital Multi Strategy II Average Aegon International M&G Corporate Bond Below average Aegon International M&G Corporate Bond (Series B) Below average Aegon International M&G Global Emerging Markets High risk Aegon International M&G Global Emerging Markets (Series B) High risk Aegon International M&G Optimal Income Below average Low to medium risk Aegon International M&G Optimal Income (Series B) Below average Low to medium risk Aegon International M&G Strategic Corporate Bond Below average Low to medium risk Aegon International M&G Strategic Corporate Bond (Series B) Below average Low to medium risk Aegon International M&G Property Portfolio Below average Aegon International M&G Property Portfolio (Series B) Below average Aegon International Newton Balanced Managed Average Aegon International Newton Balanced Managed (Series B) Average Aegon International Newton Global Income Above average Aegon International Newton Global Income (Series B) Above average Aegon International Newton UK Income Above average Aegon International Newton UK Income (Series B) Above average Aegon International Newton International Bond A Average Low to medium risk Aegon International Newton International Bond B Average Low to medium risk Aegon International Newton Managed Above average Aegon International Newton Managed (Series B) Above average Aegon International Newton Real Return Above average Low to medium risk Aegon International Newton Real Return (Series B) Above average Low to medium risk Aegon International Newton UK Equity Above average Aegon International Newton UK Equity (Series B) Above average Aegon International Old Mutual Global Strategic Bond Above average Low to medium risk Aegon International Old Mutual Global Strategic Bond (Series B) Above average Low to medium risk Aegon International Old Mutual UK Smaller Companies Above average High risk Aegon International Overseas Government Bond Tracker Above average Low to medium risk Aegon International Overseas Corporate Bond Tracker Above average Low to medium risk Page 7 of 10

8 at Quarter 4 Aegon International Schroder Absolute Return Bond Below average Aegon International Schroder Absolute Return Bond (Series B) Below average Aegon International Schroder Asian Alpha Plus Aegon International Schroder Asian Alpha Plus (Series B) Aegon International Schroder European Alpha Plus Above average High risk Aegon International Schroder European Alpha Plus (Series B) Above average High risk Aegon International Schroder European Opportunities Above average High risk Aegon International Schroder European Opportunities (Series B) Above average High risk Aegon International Schroder Global Property Securities Above average Aegon International Schroder Global Property Securities (Series B) Above average Aegon International Schroder Income Above average Aegon International Schroder Income (Series B) Above average Aegon International Schroder Tokyo Above average High risk Aegon International Schroder Tokyo (Series B) Above average High risk Aegon International Schroder UK Alpha Plus Above average High risk Aegon International Schroder UK Alpha Plus (Series B) Above average High risk Aegon International Schroder UK Corporate Bond Below average Aegon International Schroder UK Corporate Bond (Series B) Below average Aegon International Schroder UK Mid 250 Above average High risk Aegon International Schroder UK Mid 250 (Series B) Above average High risk Aegon International Schroder US Mid Cap Above average Aegon International Schroder US Mid Cap (Series B) Above average Aegon International Somerset Global Emerging Markets Aegon International Templeton Global Total Return Bond Above average Aegon International Templeton Global Total Return Bond (Series B) Above average Aegon International Threadneedle American Above average High risk Aegon International Threadneedle American (Series B) Above average High risk Aegon International Threadneedle UK Equity Income Above average Aegon International Threadneedle UK Equity Income (Series B) Above average Aegon International Threadneedle UK Property Trust Below average Aegon International Threadneedle UK Property Trust (Series B) Below average Aegon International UBS Balanced Managed Average Aegon International UBS Balanced Managed (Series B) Average Aegon International UBS Global Emerging Markets High risk Aegon International UBS Global Emerging Markets (Series B) High risk Aegon International UBS US Equity Above average High risk Aegon International UBS US Equity (Series B) Above average High risk Aegon International Asian Equity Select Portfolio Aegon International Asian Equity Select Portfolio (Series B) Aegon International Balanced Manager of Managers - Series A Average Aegon International Balanced Manager of Managers - Series B Average Aegon International Balanced Passive Average Page 8 of 10

9 at Quarter 4 Aegon International Balanced Passive (Series B) Average Aegon International Balanced Plus Select Portfolio Average Aegon International Balanced Plus Select Portfolio (Series B) Below average Aegon International Balanced Select Portfolio Below average Aegon International Balanced Select Portfolio (Series B) Average Aegon International 50/50 Cautious Managed Collection Below average Aegon International 50/50 Cautious Managed Collection (Series B) Below average Aegon International 60/40 Cautious Managed Collection Below average Low to medium risk Aegon International 60/40 Cautious Managed Collection (Series B) Below average Low to medium risk Aegon International Continental European Equity Tracker Above average High risk Aegon International Continental European Equity Tracker (Series B) Above average High risk Aegon International 70/30 Defensive Managed Collection Low Low to medium risk Aegon International 70/30 Defensive Managed Collection (Series B) Low Low to medium risk Aegon International 80/20 Defensive Managed Collection Low Low to medium risk Aegon International 80/20 Defensive Managed Collection (Series B) Low Low to medium risk Aegon International European Equity Select Portfolio Above average Medium to High risk Aegon International European Equity Select Portfolio (Series B) Above average Medium to High risk Aegon International External Balanced Collection Average Aegon International External Balanced Collection (Series B) Average Aegon International External Stockmarket Collection Above average Aegon International External Stockmarket Collection (Series B) Above average Aegon International Global Emerging Markets Equity Select Portfolio Aegon International Global Emerging Markets Equity Select Portfolio (Series B) Aegon International Growth Plus Select Portfolio Above average Aegon International Growth Plus Select Portfolio (Series B) Above average Aegon International Growth Select Portfolio Above average Aegon International Growth Select Portfolio (Series B) Above average Aegon International Horizon - Series A Average Aegon International Bond Select Portfolio Below average Low to medium risk Aegon International Bond Select Portfolio (Series B) Below average Low to medium risk Aegon International Japan Equity Tracker Above average High risk Aegon International Japan Equity Tracker (Series B) Above average High risk Aegon International Japanese Equity Select Portfolio Above average High risk Aegon International Japanese Equity Select Portfolio (Series B) Above average High risk Aegon International Managed Risk Portfolio Balanced Average Aegon International Managed Risk Portfolio Cautious Below average Aegon International Managed Risk Portfolio Defensive Low Low to medium risk Aegon International North American Equity Select Portfolio Above average Aegon International North American Equity Select Portfolio Above average (Series B) Aegon International North American Equity Tracker Above average Page 9 of 10

10 at Quarter 4 Aegon International North American Equity Tracker (Series B) Above average Aegon International Pacific Ex-Japan Equity Tracker High risk Aegon International Pacific Ex-Japan Equity Tracker (Series B) High risk Aegon International Property Below average Very high risk Aegon International Property (Series B) Below average Very high risk Aegon International Property Select Portfolio Below average Aegon International Property Select Portfolio (Series B) Below average Aegon International Prospect - Series A Below average Aegon International Select Distribution Below average Aegon International Select Distribution (Series B) Below average Aegon International Select Reserve Low Low to medium risk Aegon International Select Reserve (Series B) Low Low to medium risk Aegon International Short-Term Bond Low Low risk Aegon International Short-Term Bond (Series B) Low Low risk Aegon International UK Cash Minimal Very Low risk Aegon International UK Cash (Series B) Minimal Very Low risk Aegon International UK Cash (Series C) Minimal Very Low risk Aegon International UK Corporate Bond Below average Low to medium risk Aegon International UK Corporate Bond (Series B) Below average Low to medium risk Aegon International UK Corporate Bond Select Portfolio Below average Low to medium risk Aegon International UK Corporate Bond Select Portfolio (Series B) Below average Low to medium risk Aegon International UK Deferred Distribution Below average Aegon International UK Deferred Distribution (Series B) Below average Aegon International UK Equity Select Portfolio Above average Aegon International UK Equity Select Portfolio (Series B) Above average Aegon International UK Fixed Interest Below average Aegon International UK Fixed Interest (Series B) Below average Aegon International UK Fixed Interest (Series C) Below average Low to medium risk Aegon International UK Government Bond Below average Aegon International UK Government Bond (Series B) Below average Aegon International UK Index Tracker Above average Aegon International UK Index Tracker (Series B) Above average Aegon International Universal Balanced Collection Average Aegon International Universal Balanced Collection (Series B) Average Aegon International Vantage - Series A Below average Aegon International Vista - Series A Below average Athora Ireland plc, registered office: 2nd Floor IFSC House, Custom House Quay, Dublin, D01 R2P9, Ireland. Registered in Ireland (No ). Authorised by the Central Bank of Ireland and subject to limited regulation by the Financial Conduct Authority. Details about the extent of our regulation by the Financial Conduct Authority are available from us on request. ATH_AI /18