Risk and Return?

There is a trade-off between risk and return. Generally, the higher the level of risk you are prepared to accept when investing, the higher the potential return will be. It's human nature to want the highest return possible, so often the best way to choose a fund is to understand the level of risk associated with different investment types, and determine your risk comfort level ( Risk Profiler ).

Remember that the higher the potential return, the higher the potential loss may be, and that negative returns are possible for all investment types.

There are two principles to consider when working out your individual risk/return comfort level.
1.The length of time over which you will be investing.
2.The fact that investments which provide a higher return over a period of five years or more will typically have wider variations in return from year to year, and that over short periods of time (eg 1 year) the return may be negative.

Remember that a managed investment can reduce the inherent risks in most types of investments through the use of diversification.