Fund risk ratings explained

Our fund risk ratings can help you choose a fund which suits your attitude to risk

We provide risk ratings for all the funds in our Platinum 120 and weekly fund in focus. The funds fall into three categories:

  • Lower risk (L)
  • Medium risk (M)
  • Higher risk (H)

Within each category, funds are classified according to their size and the different types of investments they contain. The higher the number, the higher the risk (and potential to be more volatile).

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Our risk rating
Type of fund
Description
L1 Cash The lowest level of risk and volatility.
L2 UK gilt and sovereign debt Predominantly contains UK Government Gilts of varying maturity.
L3 Corporate bonds Invests in companies which issue debt to raise capital. Underlying assets need to be considered: funds which primarily invest in ‘investment grade’ debt will tend to be less volatile and at less risk of company defaults compared to those which focus on ‘non-investment grade’ debt.
M4 Property Invests directly in bricks and mortar, or property company shares. May include overseas holdings.
M5 UK equity Focusses on the UK, investing in large FTSE 100 companies through to small AIM/fledgling FTSE companies.
Global managed Must be diversified by geographic region, even where a style or theme exists, for example a focus on an industry sector.
M6 European Looks to invest across Europe, excluding the UK.
M7 North American Focusses on North America, however investments may occasionally be outside this geographical area.
H8 Asia Includes countries such as Japan, Australia and developed economies from Asia (excluding China).
H9 Emerging markets Predominantly contains investments which focus on developing and emerging economies such as BRIC (Brazil, Russia, India and China).
H10 Specialist Focusses on investments which are specialist or specific to an industry or physical asset, for example commodities or technology (excluding property).

How we rate funds

We use a range of news, analysis and research tools to rate funds. Our primary source is Financial Express Analytics, but we also meet regularly with the various fund houses. Fundamental data used includes beta, alpha, Sharpe ratio, Treynor measure, Jensen measure, performance comparative to benchmark and sector, positive and negative periods, r2, tracking error and downside risk.

Investment research policy

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Email: dealing@share.co.uk

Phone: 01296 41 42 43

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