Fund Volatility Rating Survey 2023

About this Survey

The objective of conducting this survey on consultants is to gain a comprehensive understanding of their experiences and perspectives regarding fund volatility ratings. The specific objectives include:

1. Assessing Consultant Practices: Understanding the approaches and practices of consultants in utilising fund volatility ratings as a risk measure when recommending investment products to clients.
2. Evaluating the Efficacy of Fund Volatility Ratings: Assessing the effectiveness and usefulness of fund volatility ratings in helping consultants assess and compare different investment options for clients.
3. Identifying Challenges and Difficulties: Identifying any challenges or obstacles consultants may face in comprehending and utilising fund volatility ratings, including any specific aspects that present difficulties.
4. Gathering Feedback for Improvement: Encouraging consultants to provide insights, preferences, and recommendations for enhancing the presentation and communication of fund volatility information.

The survey aims to collect in-depth insights from consultants to improve the utilisation of fund volatility ratings in client interactions and further enhance investor protection. By achieving these objectives, the survey will contribute to a more robust framework for consultants to guide investors in making informed investment choices aligned with their risk tolerance and financial goals.

Background

Fund volatility refers to the measure of how much a fund’s value or returns fluctuate over a given period. It helps investors understand the potential ups and downs they may experience when investing in a particular fund.

Volatility is usually calculated based on historical data and is represented as a number or rating. A higher volatility indicates that the fund’s returns have experienced larger swings, both positive and negative, while lower volatility suggests a steady pace of value changes that may translate to stable returns.

Investors can utilise fund volatility rating when making investment decisions as it can provide insights into the potential risks and rewards associated with a fund. A highly volatile fund may offer the possibility of higher returns but also carries a greater risk of losses. On the other hand, a less volatile fund may provide more stability but with potentially lower returns.

The key to understanding the fund volatility ratings by investors is crucial so that they are able to assess their risk tolerance and choose investments that aligns with their financial goals and comfort level. It is important to note that fund volatility rating is just one factor to consider alongside other investment considerations, such as investment objectives, time horizon, diversification and etc.