Some words of caution on risk-rated funds

The process of risk profiling mutual funds has become increasingly popular both in the wake of the regulator’s Assessing Suitability paper (published in April 2012) and in response to increasing demand from advisers for high quality outsourced solutions in light of the Retail Distribution Review (RDR). The paper highlights the importance of a firm ensuring its clients’ investment portfolios match their risk profiles, generated by any risk profiling tool that the advisers use. Therefore, if a client is deemed to have a low tolerance or capacity for risk, their portfolio must be low ris...