Understanding Risk Profiles

A major part of investors making the right choice for themselves comes with assuming the relevant level of risk associated with the reward they’re looking to achieve. 

Investment vehicles are categorised according to a risk profile, which is declared on a fund’s minimum disclosure document (MDD). This makes it easy for investors to align their tolerance for volatility with their expectations. 

Volatility is how much and how quickly prices move, so this refers to the amount of uncertainty (or risk) related to the size of the changes in the security’s value.

Satrix ETFs and unit trusts span conservative to aggressive risk profiles accommodating a wide variety of investor risk appetites. The relationship between risk and reward is quite straightforward when it comes to investing: the greater the risk an investor is willing to take, the greater the potential reward they could expect over the long term. 

Below, we cover the range of risk profiles Satrix offers:

Conservative 

This category is for investors with extremely low-risk tolerance and is designed for minimum capital fluctuations and volatility. 

• Ideal as a short-term investment and for preserving capital.
• As a cash-based investment that aims to yield returns similar to the inflation rate, there are no growth assets in these types of funds.  

Cautious 

With low exposure to equities, funds in this category have low levels of volatility and aim to provide inflation-beating capital protection. 

• Generate a stable, high level of income over and above cash returns in the medium term. 
• ETFs and unit trusts in this category are designed to reduce the probability of capital losses.  

Moderate

Moderate risk-rated funds aim to strike a balance by aiming for both income and capital growth. 

• Align with medium-term goals.
• Funds in this category aim to achieve real growth (after inflation) in the medium term while reducing the probability of capital losses.

Moderate-Aggressive

Funds in this category aim to deliver capital growth over the medium- to long-term, with income a secondary consideration. 

• These funds reduce volatility compared to their equity-only counterparts (which fall into the Aggressive category). 

Aggressive

At the opposite end of the risk spectrum from Conservative investment vehicles, funds in this category are aggressively managed and aim to deliver capital growth over the long term. 

• These funds comprise of equity exclusively.
• Volatility is expected in this category over the short- to medium-term, with higher returns expected over the long term.

To explore the full range of Satrix funds and the risk categories they all fall under, click here.  

Disclaimer

_{Satrix Investments (Pty) Ltd is an approved FSP in terms of the Financial Advisory and Intermediary Services Act (FAIS). The information does not constitute advice as contemplated in FAIS. Use or rely on this information at your own risk. Consult your Financial Adviser before making an investment decision.}

_{Satrix Managers (RF) (Pty) Ltd (Satrix) is a registered and approved Manager in Collective Investment Schemes in Securities and an authorised financial services provider in terms of the FAIS.} 

_{While every effort has been made to ensure the reasonableness and accuracy of the information contained in this document (“the information”), the FSPs, their shareholders, subsidiaries, clients, agents, officers and employees do not make any representations or warranties regarding the accuracy or suitability of the information and shall not be held responsible and disclaim all liability for any loss, liability and damage whatsoever suffered as a result of or which may be attributable, directly or indirectly, to any use of or reliance upon the information.}