The risk that an asset may be difficult to sell in the market to generate cash when required. An illiquid asset takes time to sell and may require the price to be marked down in order to achieve the sale. This risk is most often associated with property and alternative investments.

Inflation Risk

The risk that the purchasing power of your investment may not keep pace with inflation. This will occur if your investment is providing a net return less than the inflation rate.

Regulatory Risk

The risk that government policy, regulatory or legislative changes could impact on taxation, social security, costs and reporting requirements. This risk may also apply to overseas investments as changes of policy determine whether funds can be withdrawn from an overseas country.

Strategy Risk

The risk an investment strategy may no longer be appropriate for you because of the impact of legislative and other changes on your personal or financial circumstances or objectives. This is why you should review your investments regularly.

Market Risk

This risk relates to events that may occur which have a negative effect on the price of all types of investments in a particular market. For example, the stock market for shares or the bond market for fixed interest securities. Events that can influence markets include legal and economic policy, political activity, investor sentiment, technological development or failure, and world events.

Asset Risk

Asset risk is the risk inherent in each of the major asset classes offered within the Fund: shares, property, fixed interest and cash. It is important to understand the risks involved within each asset class as it will help in understanding the risk inherent in each investment option.

Shares

The risks of investing in shares includes a decline in the value of your investment or a reduction in the income received. These risks may occur for a number of reasons, some of which include a change in the company’s operating environment or internal operations, poor management, and reduced profit expectations. Rising interest rates can also have a negative effect on share prices as increased borrowing costs by a company may cause profits to decline. Investments in international shares also face the additional risk of currency. This risk may occur with adverse movements in the exchange rate to reduce the Australian dollar value of international investments. For example, if shares in an American company are purchased and then the Australian dollar rises relative to the American dollar the value of those shares may decrease.

Property

The risks of investing in property include a decline in the value of your investment and/or a reduction in the income received. This may occur for a number of reasons including, market supply, unexpected loss of tenants, changing rental rates, poor management, and rising interest rates.

Fixed Interest

Investments into fixed interest assets may result in a reduction of income and/or a fall in the value of your investment. These outcomes may occur if an issuer of a security cannot meet their repayment obligations or repay the initial principal invested. The value of fixed interest securities can also fall when interest rates rise. Investments into world fixed interest markets may also face the additional risk of adverse currency movements.

Cash

Investments into cash are considered the least risky of all asset classes. The potential of a reduction in income and/or capital value is very low. However, these outcomes may occur if the issuer of a security is unable to meet their repayment obligations or repay the initial principal invested.