The categorisation of investment risk on key information documents (KIDs) is "positively misleading" for the end investor, according to economist John Kay.
The Scottish Mortgage Investment Trust non-executive director said the industry needed to do something about the way investors understand risk. "KIDs risk categorisation is not only irrelevant to that but is positively misleading and unhelpful in inviting us to think about risk in ways that do not correspond to the genuine needs of retail investors," he told the Association of Investment Companies' (AIC) annual conference. Kay (pictured) referred to the use of the ‘value-at-risk equivalent volatility' (VEV) formula in KIDs, which include a risk rating calculation for an investment - ...
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