The Synthetic Risk and Reward Indicator (SRRI) was defined in 2009 by the Committee of European Securities Regulators (CESR) to provide investors with a method of assessing a fund’s risk.
The SRRI measures the volatility of the fund. Higher volatility means there is greater uncertainty about the size of the changes in a fund’s value. This means that the price of the fund can change quickly and dramatically in either direction. Lower volatility means that a fund’s value is not expected to fluctuate dramatically, but rather to change in value at a steady pace over a period of time.
The table below shows the mapping between the volatility and the SRRI value. The table shows the differences in percentages that the value of a fund may experience over one year (Annualised Volatility). The percentage is linked to the respective SRRI rating. The more limited the variation is, the lower the SRRI Rating of a fund. The higher the variation, the higher the SRRI Rating.
| SRRI | Annualised Volatility |
| 1 | 0 – 0.49% |
| 2 | 0.5 – 1.99% |
| 3 | 2 – 4.99% |
| 4 | 5 – 9.99% |
| 5 | 10 – 14.99% |
| 6 | 15 – 24.99% |
| 7 | 25% + |
The SRRI is calculated using the fund returns for the last five years. If a fund is less than five years old, the returns of a comparable benchmark are used for the period before the fund was launched.