Some of our clients have a higher risk appetite than others – the latter tend to skew young (and male!) – albeit ESMA 5+ rated Irish investment funds can also sometimes be part of a portfolio for ‘late starters’ who are in their fifties or older.
Should you consider a higher risk portfolio in order to compound potentially higher returns over the term of your investment?
Get your own pension review by using the online form below
You can choose to get a review on an existing pension and/or enquire about setting up a new plan.
What are ESMA ratings?
The European Securities and Markets Authority (ESMA) is an independent EU authority that supervises and regulates financial markets in the European Union.
ESMA assesses and rates the risks associated with different types of investment funds in the European Union. The risk rating system introduced by ESMA is based on a methodology that takes into account factors such as the volatility of the fund’s net asset value, the liquidity of the underlying assets, and the concentration of the portfolio.
The purpose of this risk rating system is to help investors make more informed investment decisions by providing them with an indication of the level of risk associated with different funds. The risk rating system also helps regulators and fund managers to identify and address potential risks to the stability of the financial system.
ESMA ratings explained from 1 to 7 [low risk to very high risk]
ESMA’s risk rating system consists of seven levels, ranging from the lowest risk rating of 1 to the highest risk rating of 7. Here is a brief description of each rating:
- Low Risk: This rating indicates that the fund has a low level of risk associated with it. The fund is expected to have a relatively stable net asset value and a low probability of losing value over time.
- Below Average Risk: This rating indicates that the fund has a slightly higher level of risk compared to a low-risk fund. The fund may have a slightly higher probability of losing value over time, but it is still considered to be a relatively low-risk investment.
- Average Risk: This rating indicates that the fund has an average level of risk associated with it. The fund may have some volatility in its net asset value, but the probability of losing value over time is still considered to be relatively low.
- Above Average Risk: This rating indicates that the fund has a higher level of risk compared to an average-risk fund. The fund may have significant volatility in its net asset value, and there is a higher probability of losing value over time.
- High Risk: This rating indicates that the fund has a high level of risk associated with it. The fund is expected to have significant volatility in its net asset value, and there is a high probability of losing value over time.
- Very High Risk: This rating indicates that the fund has a very high level of risk associated with it. The fund may invest in highly volatile assets and is expected to have a high probability of losing value over time.
- Extremely High Risk: This rating indicates that the fund has an extremely high level of risk associated with it. The fund may invest in highly speculative assets and is expected to have an extremely high probability of losing value over time.
If you would like a quick check of your own personal pension, just submit this 2 minute questionnaire below and we can do a no-obligation quick review of same. Of course if you would like to start a pension, you have come to a good place too.
