Risks

Listed Managed Investments can effectively reduce the risk of being exposed to a single security, by investing in a portfolio of securities, thereby reducing the impact of a poor performance by any single security.

However there are a number of other risks to be aware of. The risks that apply will largely be determined by the asset class you invest in, and the selection of investments the portfolio manager makes. These risks include:

Market risk

Markets, and asset classes within them, are cyclical; the performance of various asset classes is not necessarily correlated over time. Market risk is the risk of investing in an asset class which may decline in value.

Security risk

Within any given asset class different securities may perform differently. The individual securities selected for a Managed Investment will ultimately determine its risk level and performance.

Diversification risk

Investing in a small number of assets or in only one asset class exposes an investor to the risk that these assets underperform. Without diversification, your investment fortunes are tied to the performance of a narrow section of the market.

Currency risk

Movements in the relative value of international currencies influence the value of international assets.

Liquidity risk

Listed Managed Investments incorporate two levels of liquidity risk. The first relates to the portfolio manager's ability to buy or sell positions for the investment portfolio, the second relates to an individual investor's ability to buy or sell the Managed Investment.

Structure risk

The structural and operational characteristics of the Managed Investment may affect its ability to perform.

Gearing risk

Some Managed Investments may borrow funds to increase potential returns, a technique that can magnify both gains and losses.