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Risk and Return

 

Risk and potential return are two sides of a balance scale. Closely connected and require a dynamic balance rather than leaning to either extreme.

All investments involve risk, with the nature and extent varying by product. Generally, pursuing higher potential returns may require investors to accept higher level of investment risk. The actual risk-return profile of a particular investment product depends on factors such as underlying markets, asset allocation, credit quality, currency exposure, level of concentration, the use of derivatives, and other considerations. Investors should always refer to the relevant product offering documents and risk disclosures.

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While risk cannot be eliminated entirely, managing it through a disciplined strategy may help you make investment decisions that are better align with your personal needs and circumstances:


  1. Assess Your Risk Profile — Before making any investment, you should first understand your investment objectives and investment horizon. Evaluate your capacity for risk and how much investment loss you can comfortably absorb during adverse market conditions. (Refer to “How to Choose the Right Fund?”)
  2. Select the Asset Classes — Once you have identified your risk profile, choose asset classes that align with your individual circumstances and investment needs:
  • Capital Growth Objective: Investors who seek long-term capital growth may, subject to your individual circumstances, consider a more aggressive investment strategy to pursue higher potential returns. Examples include equity funds or thematic growth funds.
  • Balanced Income and Growth Objective: Investors who seek both income and capital growth may, subject to yourindividual circumstances, consider a more diversified investment strategy which strikes a balance between generating income and capital growth. Examples include multi-asset funds that invest across various asset classes and offer dividend payout features.

3 Key Principles for Risk Management

Striking a balance between risk and potential return relies on three fundamental principles:

<p><strong>Diversification</strong></p>

Diversification

Investors may consider spreading their capital across different asset classes or investment products, such as equity, bond, or multi-asset funds, to build a more diversified portfolio. This approach helps diversify portfolio risk, reduce overconcentration in any single asset, sector, or market, and allowing investors to participate in investment opportunities across various asset classes and markets.

<p>Long-Term Investing</p>

Long-Term Investing

Giving your investments sufficient time helps unleash the effect of compounding. A disciplined, long-term investment approach helps capture long-term capital appreciation opportunities while reducing the influence of short-term market fluctuations on investment decisions.

<p><strong>Regular Review</strong></p>

Regular Review

As life stages evolve and market conditions fluctuate, periodic reviews and rebalancing help ensure an investment strategy remains aligned with long-term financial goals.

Disclaimer

The information provided is for reference only and does not constitute any investment advice. Investment involves risk. The price of an investment fund unit may go up as well as down and investment funds may become valueless. Past performance is not indicative of future performance. Before making any investment decisions, you should consider your own financial situation, investment objectives and experience, risk acceptance and capacity, and carefully read the relevant fund offering documents to understand the nature and risks of the relevant products.