Defaqto Risk Profiles

Defaqto has developed its own accumulation Risk Profiles and risk rates funds to match these profiles. The profiles are based on volatility ranges and allow you to match clients' objectives to suitable investment options.

We have a set of 10 Risk Profiles, where profile 1 represents the lowest risk, and 10 indicates the highest risk. The profiles are based on volatility ranges (%), and there are overlapping boundaries between each of the ratings. This minimises funds moving up or down the ratings over time. 

Risk Rating process

Defaqto has an extremely robust process to risk rate funds. We look at the fund’s past volatility and use Moody’s stochastic engine to model the fund’s future volatility using its asset allocation (both long term and current), together with assumptions for the future returns, volatilities and co-variance of the asset classes it holds. Then we will hold a discussion with the fund manager which ensures a common understanding of our process, but also gives us the chance to consider other factors, such as a manager or mandate change during the life of the fund, which the numbers alone might not capture. The fund is then given a Risk Rating which corresponds to a Risk Profile.

Over 600 Defaqto risk rated funds

We risk rate over 600 multi-asset funds and DFM managed portfolios (both direct and on platform) and this number is growing all the time. This gives you a large number of funds to make recommendations from, whilst providing you flexibility with your investment strategy.

 

 

 

 

 

 



Quarterly reviews

Once a fund has received a Risk Rating, we review this rating every quarter in our Investment Committee to ensure it still sits within the agreed parameters for the Risk Profile.


In the unlikely event that funds move from one Risk Rating to another, the Engage Core notification centre will alert you, so you can revisit your clients’ portfolios.

Want to know more about risk profiling in Engage?

 

Request demo

Let us show you how Engage Core can help you deliver client-centric, compliant advice. You can either call us on 0808 1000 804, email sales@defaqto.com or complete the form below.

 

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