Barclays has revealed that it did not advise its clients of changes to the risk profile of some of its investment funds, following a review of its funds products during 2007.
As a result, some Barclays customers were unaware that their investment portfolio carried a level of risk higher than their preferences, as stated in their individual ‘risk profile’.
The news has emphasised the need for funds investors to constantly and regularly review their funds investments, with the help of independent financial advice.
An annual or semi-annual review of funds investments can check that the volatility and risk level of the funds in a client’s portfolio are still in keeping with their risk profile, as assessed by the financial adviser when the investments were made.
At Principle First, we use a system of risk profiling based on 6 distinct categories, which guarantees to the client that his money is invested in keeping with his chosen risk strategy.
The first two categories are for those clients whose risk profile identifies them as ‘Very Defensive’ or ‘Defensive’. Investors in these two categories are most comfortable with a very low-risk strategy.
The ‘Cautious’ risk profile reflects the investor seeking returns that are better than a bank deposit account, but without major fluctuations in the short term.
The ‘Balanced’ investor is prepared to accept a certain amount of short-term fluctuation, for a healthy balance of risk and reward.
The ‘Moderately Aggressive’ and ‘Aggressive’ categories are suitable for those for whom capital growth is the driving concern. These investors are comfortable with considerable short-term fluctuations in the value of their investments, even if these exceed 25% in any given year. The aggressive investor may consider relatively high-risk funds, for example, those which invest in the emerging economies of the Far East, in the hope of above-average returns on their investment.
With just a few simple questions, our online Risk Profiler will identify your personal risk profile.
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