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How is the Risk Level calculated for Flexible Portfolios?

The Risk Level is a measure of risk, expressed as a percentage, whereby in any given year, there is a 99% probability that you won’t lose more than this percentage in terms of the portfolio’s value.

These are the Risk Level brackets for Flexible Portfolios.

  • Very Conservative: Up to 7%
  • Conservative: 8-13%
  • Moderate: 14-19%
  • Balanced: 20-25%
  • Aggressive: 26-32%
  • Very aggressive: 33% and more

For example, in a worst-case scenario, there's a 99% chance a Balanced portfolio won't lose more than 25% of its value in any given year. Generally, a higher Risk Level percentage denotes a more risky portfolio, and thus should be accompanied with a longer term investment horizon.

We calculate the Risk Level by looking at long-term asset class return and assumptions, and we update these calculations.

Your portfolio's Risk Level could change for one of two reasons: In the case that the quarterly update calculates a new Risk Level, or in the case that our investment team replaces a particular ETF in favour of a similar, more cost-efficient or preferable one in the same asset class.