Explanation of the risk classes for investment funds

General

The risks are classified into classes based on the standard deviation between the monthly returns expressed in euros.

The standard deviation is a statistical measure that measures the spread around an average. The standard deviation for a fund shows how returns have varied over a given period. Investors use the standard deviation over a given period as a measure of risk, which can then be used to predict the range in which future returns are likely to occur. When a fund has a high standard deviation, the predicted range is wider, implying higher volatility.

The risk classes are defined as follows:

Class 1: the standard deviation is between 0% and 0.5%

Class 2: the standard deviation is between 0.5% and 2%

Class 3: the standard finish is between 2% and 5%

Class 4: The standard finish is between 5% and 10%

Class 5: the standard deviation is between 10% and 15%

Class 6: the standard deviation is between 15% and 25%

Class 7: the standard deviation is above 25%

A period of five years is set as a benchmark.

Funds of funds:

Because a fund of funds is composed of other investment funds, the manager calculates the composite standard deviation monthly together with the evolving standard deviation.

Meaning

These risk classes help the investor to choose the risk profile that best meets his needs.

The scale is mainly a guideline and is based on past results, the types of assets and the type of management.

These risk scales can be evaluated over time and are therefore adjusted accordingly in the relevant publications of the relevant fund.

In general we can say that:

- Money market investments involve less risk than investments in bonds, which in turn involve less risk than investments in shares.

- Diversification across different markets and types of assets reduces the overall risk within the portfolio.

- Funds of funds, due to the presence of different managers in the composition, generate a lower risk than funds issued by a single manager.

- Funds with an aggressive management style contain more risk than funds with a conservative management style.

- Funds that invest in currencies other than their own reference currency involve more risk.

- Funds of funds can be better evaluated by determining the risk class of the funds they invest in than by assessing them according to the traditional asset classes to which they belong.