Risks involved in outsourced options

This article is part of
Discretionary Fund Management - July 2015

These lists will provide a starting point in the search for suitable funds, but it can be difficult to compare the past performance of risk-targeted funds, as many will not sit within any Investment Association sector.

Advisers who wish to understand how well an investment manager has performed in relation to the risk taken will find the FE Trustnet tool useful. Financial Express has grouped together a list of risk-targeted multi-asset funds and given each fund a risk score. This looks back at the actual volatility of a fund and compares that with the volatility of the FTSE 100 index.

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This provides a common language in which to describe how much risk has been taken in different funds (at least expressed in relation to the volatility of one asset class) and allows the investment performance of different funds to be compared based on the level of risk that has been taken in the past. This tool can look at longer periods, such as five years, to provide a greater insight into performance against a given level of risk.

John Jackson is managing director, intermediary business at Cornelian Asset Managers