Laying quality foundations

Institutional Client Risk Profiling

Trust's Risk Appetite

These questions help us to gauge how much risk the trustees are willing to take on, bearing in mind that greater risk is needed in order to have the potential to achieve higher returns.

Please answer all the questions by selecting one of the options. Choose the option that best indicates how you feel about each question. If none of the options is exactly right for you, choose the option that is closest.

1. Compared to others, how do you rate your willingness to take financial risks?

2. When faced with a major financial decision, are you more concerned about the possible losses or the possible gains?

3. What degree of risk have you taken with your financial decisions in the past?

4. What degree of risk are you currently prepared to take with your financial decisions?

5. Most investment portfolios have a mix of investments - some of the investments may have high expected returns but with high risk, some may have medium expected returns and medium risk, and some may be low-risk/low-return. (For example, shares and property would be high-risk/high-return whereas cash and bank deposits would be low-risk/low-return.)

Which mix of investments do you find most appealing? Would you prefer all low-risk/low-return, all high-risk/high-return, or somewhere in between?

Please select one of the seven portfolios listed below.

Portfolio High Risk/Return Medium Risk/Return Low Risk/Return
0% 0% 100%
0% 30% 70%
10% 40% 50%
30% 40% 30%
50% 40% 10%
70% 30% 0%
100% 0% 0%

6. Although equity based investment is more volatile it can produce higher returns and over the longer term produce returns in excess of inflation.

Which statement most accurately reflects the trustees' views about the level of return the Trust is seeking in relation to the level of inflation?

The trustees wish to achieve a return of inflation plus 5% over the longer term
The trustees wish to achieve a return of inflation plus 3% over the longer term
The trustees wish to achieve a return of inflation plus 1% over the longer term
Absolute stability in the value of the portfolio is more important to the trustees than beating inflation

7. Although equities have historically produced superior returns over the longer term they also fluctuate more and can fall in value.

When trying to achieve this return for the portfolio and in normal circumstances, what is the maximum loss the trustees would be willing to accept in any one year?

-25%
-15%
-8%
The trustees do not wish to see the value of the portfolio fall

8. When making an investment, return and risk usually go hand-in-hand. Investments which produce above-average returns are usually of above-average risk.

With this in mind, how much of the funds you have available to invest would you be willing to place in investments where both returns and risks are expected to be above average?

9. Think of the average rate of return you would expect to earn on an investment portfolio over the next ten years. How does this compare with what you think you would earn if you invested the money in bank deposits?

About the same rate as from bank deposits
About one and a half times the rate from bank deposits
About twice the rate from bank deposits
About two and a half times the rate from bank deposits
About three times the rate from bank deposits
More than three times the rate from bank deposits

Trust's Capacity to Take Loss

10. You are considering placing one-quarter of your investment funds into a single investment. This investment is expected to earn about twice the bank deposit rate. However, unlike a bank deposit, this investment is not protected against loss of the money invested.

How low would the chance of a loss have to be for you to make the investment?

Zero, i.e. no chance of loss
Very low chance of loss
Moderately low chance of loss
50% chance of loss

11. With some types of investment, such as cash and bank deposits, the value of the investment is fixed. However inflation will cause the purchasing power of this value to decrease.

With other types of investment, such as shares and property, the value is not fixed. It will vary. In the short term it may even fall below the purchase price. However, over the long term, the value of shares and property should certainly increase by more than the rate of inflation.

With this in mind, which is more important to you - that the value of your investments does not fall or that it retains its purchasing power?

Much more important that the value does not fall
Somewhat more important that the value does not fall
Somewhat more important that the value retains its purchasing power
Much more important that the value retains its purchasing power

12. This questionnaire is scored on a scale of 0 to 100. When the scores are graphed they follow the familiar bell-curve of the Normal distribution shown below. The average score is 50. Two-thirds of all scores are within 10 points of the average. Only 1 in 1000 is less than 20 or more than 80.

What do you think your score will be?   

The following questions will help us to build up a picture of the relative importance the investment funds the trustees have put in our care in relation to the overall wealth and income requirements.

13. How important is the income generated by this portfolio in terms of funding your on-going spending requirements?

Thinking about all of the Trust's sources of income what proportion will be generated by this portfolio?

The Trust has income from other sources. There is no requirement for this portfolio to distribute any income
Income generated by this portfolio will represent less than 20% of the Trust's overall income
Income generated by this portfolio will represent between 20% and 50% of the Trust's overall income
Income generated by this portfolio will represent between 50% and 75% of the Trust's overall income
This portfolio is required to produce most of the Trust's on-going income requirement

14. The capital value of your portfolio may fluctuate up and down but the income produced may behave differently. Fixed income investments by their nature produce a fixed and regular flow of income but this does not usually increase with inflation. In order to produce a growing income over the longer term it will be necessary to include an element of equity investment with commensurate levels of risk.

How important is stability of income from the portfolio?

The trustees are aiming for capital growth and do not require an income from the portfolio
The trustees wish to receive income distributions from the portfolio but the amount can vary up or down
The trustees want a stable or fixed amount of income even if this means it does not rise with inflation
The trustees wish to see the income grow by at least as much as inflation over time

15. In order for us to recommend a suitable investment strategy, we need to understand how significant the portfolio is in terms of the Trust’s overall wealth.

This portfolio represents the following proportion of the investable assets.

Over 75% of the investable assets
Between 50% and 75% of the investable assets
Between 20% and 50% of the investable assets
Less than 20% of the investable assets

16. Sometimes circumstances change quickly and money may be required at short notice.

Does the Trust have a "cash buffer" (a proportion of assets which is in cash and which is readily accessible at short notice for unforeseen circumstances)?

The Trust has cash which represents over 10% of its total investable assets
The Trust has cash which represents approximately 10% of its total investable assets
The Trust has cash which represents between 5% and 10% of its total investable assets
The Trust has cash which represents less than 5% of its total investable assets
The Trust has only current account cash. The Cantab portfolio will represent all of its investable assets

17. Please tell us if the Trust has any outstanding liabilities or significant future financial commitments e.g. loans, mortgages, tax liabilities, capital expenditure

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