Establishing an individual investor’s attitude to risk is critical for helping financial advisers assess fund suitability and to provide ongoing investment recommendations. To help with this task, six Janus Henderson funds have been analysed by Distribution Technology and assigned a risk profile between 1 and 10. Distribution Technology is an independent company that specialises in developing risk profiling systems for financial advisers.
By determining a risk profile for the Janus Henderson funds, advisers are able to match these funds with their clients’ attitude to risk. An investor’s attitude to risk is derived from their answers to a pertinent set of investment-based questions developed by Distribution Technology in association with Oxford Risk, an independent provider of risk psychology solutions.
The process of allocating a risk profile to a particular fund involves historical analysis of the returns from the fund and its benchmark with a focus on the volatility of those returns. Funds exhibiting a history of higher volatility will generate a higher risk profile than those with records of lower volatility.
It is important to understand that because a fund’s risk profile is based on historical data, the risk profile provided by Distribution Technology can change. It should not be solely relied upon when advisers are making fund suitability assessments for clients. Janus Henderson's risk-profiled funds are managed in line with the fund’s objectives and Prospectus. These funds are not managed to deliver volatility within a specific range or to deliver a specific Distribution Technology risk profile number.
|Descriptor ||Lowest risk ||Very low risk ||Low risk || Lowest medium risk ||Low medium risk ||High medium risk || Highest medium risk ||High risk ||Very high risk ||Highest risk |
Risk profiling benefits
Distribution Technology’s risk profiling analysis, part of their Dynamic Planner system, helps advisers by highlighting a list of funds that Distribution Technology have deemed to be suitable for a defined risk profile. This saves both the time and cost of researching the universe of available funds and should also assist in matching a selection from Distribution Technology’s profiled pool of funds with investors’ objectives and risk requirements.
Fund risk profiling
When risk-profiling a fund, Distribution Technology analyses:
Historical snapshots of a fund’s past asset allocation positions, which are then mapped to their standard asset classes
The volatility derived from the fund’s benchmark, if and when appropriate
The volatility of the actual performance achieved by each fund
Continuous portfolio management
It is important for advisers to be aware that the breakdown of Janus Henderson's risk-profiled funds will change over time as the fund managers alter the underlying investments. Therefore, it is important to note that the risk profile provided by Distribution Technology may change over time. Any change to a risk profile will be noted on the relevant fund page on our website.
Please note that these profiles are indicative, based on historic data and should not be solely relied upon when making suitability assessments for clients
For more information regarding risk-profiling please visit the Distribution Technology website.