The risks associated with different investments

A relationship exists between risk and reward. Each rating has a risk profile to reflect the different attitudes of risk.

High risk

Where your aim is to maximise returns over the longer-term, and are prepared to accept significant day-to-day fluctuations in the value of your money and the resulting risk of a possible loss arising at any stage. To achieve this you should consider investing in the following types of areas:

Funds that invest in a narrow range of assets, for example, shares within particular markets or sectors, that are expected to be very volatile in value, or individual shares.

Medium to high risk

Where your aim is to achieve better returns over the longer-term than are available on less speculative investments, you should be prepared to accept wide day-to-day fluctuations in the value of your money and the resulting risk of a possible loss arising at any stage. To achieve this you should consider investing in the following types of areas:

Funds that invest in a narrow range of assets, for example, shares mainly within the UK and/or Europe and other developed markets.

Medium risk

Where your aim is to achieve better returns over the longer-term than are available on more cautious investments, and you are prepared to accept some day-to-day fluctuations in the value of your money and the resulting risk of a possible loss arising at any stage. To achieve this you should consider investing in the following types of areas:

Funds that invest in a wide range of assets; or funds which invest in a range of fixed interest securities; or funds that invest solely in property; or a product whose return is linked to the performance of a stock market index

Medium to low risk

Where your aim is to achieve greater returns over the longer-term than interest paying accounts, and you are prepared to accept the risk of possibly losing some of your money and to see some fluctuation in value. To achieve this you should consider investing in the following types of areas:

Funds that invest in a wide range of assets, including shares but which aim to follow a relatively cautious approach to risk, or a product that invests in asset types that are expected to be less volatile in value than shares; or a product or fund that aims to offer a minimum amount at a set point in time.

Low risk

Where you are not prepared to take any risk with your capital and realise it may not safeguard your investments against inflation. Risk is an unavoidable part of investing. Even the cautious investor saving in a bank or building society account is exposed to the risk that the interest they receive may not be enough to match the increase in the cost of living. The amount an investor could buy with their savings would be reduced year on year. But a bank or building society customer does know that their capital is secure and any interest, once earned, is guaranteed.

With the help of your financial adviser, careful investment planning can manage risk effectively.

What funds are available and what are their risk ratings?

Our advisers can discuss our fund(s) with you, to help you decide which are most appropriate to your needs. Give us a call on 0800 092 7872 to speak to one of our advisers. Any advice will only relate to our own products.

Norwich Union funds are managed by Morley Fund Management Limited, which like Norwich Union, is an Aviva Company.

WC02033 06/2007