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What is the Synthetic Risk and Reward Indicator (SRRI) rating?

The Synthetic Risk and Reward Indicator (SRRI) was defined in 2009 by the Committee of European Securities Regulators (CESR) with the aim of providing investors with a method of assessing a fund’s risk. The SRRI measures the volatility of the fund. A 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 dramatically over a short time period in either direction. A lower volatility means that a fund’s value is not expected to fluctuate dramatically, but to rather 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 based on the fund returns over the last five years. If a fund is less than five years old, the returns of a comparable benchmark is used for the period before the fund was launched.

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