The "SRRI indicator" is used to allocate investment funds to one of three different risk categories (low risk, medium risk, above-average risk). SRRI stands for "Synthetic Risk and Reward Indicator" and is calculated in accordance with the rules issued by the Committee of European Securities Regulators. This indicator forms an integral part of the Key Investor Document (KID) and states the fluctuation of the fund unit price on a scale from 1 to 7.
Investment funds with a low SRRI typically exhibit less fluctuation and, hence, a lower probability of loss. Funds with a high SRRI experience greater fluctuation as well as a greater risk of loss.
The fund category is not a reliable guide to future performance and may change over time.
A Category 1 rating should not be construed as indicating that the investment is free of any risk. Nor does the rating constitute a target or guarantee. The risk indicator (SSRI indicator) is stated separately for each of our funds.
SRRI indicator Risk categories Volatility intervals
1 Low risk 0% to 0.5%
2 0.5% to 2.0%
3 2.0% to 5.0%
4 Medium risk 5.0% to 10.0%
5 Above-average risk 10.0% to 15.0%
6 15.0% to 25.0%
7 At least 25.0%
How the SRRI indicator is calculated
Volatility (i.e. the degree of fluctuation in the price) is calculated on the basis of the weekly data (returns) for the investment fund over the last five years. If the history of the investment fund is too short, the performance of a comparable asset or alternative methods stipulated by law can be used for calculating the SRRI. In the case of a dividend payout, these are also taken into account. Volatility as well as the SRRI as a risk indicator do not draw any distinction in the direction of the fluctuations but merely express its magnitude. 3.0% volatility, for example, means that the value of the investment fund has fluctuated by an annualised average of plus/minus 3.0% over the past five years.
Risks which are typically not taken into account by the risk category and are of significance for the fund include:
1. Credit and counterparty risks: Issuer or counterparty default may result in losses for the fund. The credit risk describes the impact of any special changes with respect to the issuer in question liable to affect the price of a security alongside general trends in the capital markets. Despite the care taken in selecting securities, it is not possible to rule out losses as a result of a sharp decline in the value of the issuer's assets.
2. Counterparty risk entails the risk of the party to a mutual contract failing to honour all or part of its obligations. This applies to all contracts which are entered into for the fund's account.
3. Liquidity risk: The risk that it may not be possible to sell, liquidate or close a position in the fund assets within a sufficiently short period of time and at limited expense with the result that the fund's ability to fulfil its redemption and payment obligations at all times may be impaired.
4. Operational risk: The risk of the fund sustaining loss as a result of shortcomings in internal processes as well as human or system failure at the level of the management company or arising from external factors as well as legal and documentary risks and risks resulting from the trading, clearing and valuation processes performed for the fund.
5. Custody risk: The fund may sustain a loss as a result of errors on the part of the custodian bank which holds the assets.
6. Risks from the use of derivatives: The fund uses derivatives not only for hedging purposes but also as an active investment instrument. This exposes the fund to additional risk.