Understanding your Range of Returns
All investments carry a degree of risk as well as potential rewards. It is important that you
understand the nature, relationship and extent of both risk and return, in order that you can
make an informed judgement about your selected portfolio.
Whilst investors do not want to take undue risk, however many fi nd that their needs are only
met by higher risk investments. As a result risk should be considered within the context of your
objectives and your attitude to potential capital gains and losses.
As the risk of potential capital loss increases so do the potential returns increase to compensate
for the risk taken.
The Estate Capital Investment Portfolios
Individual investments and the asset class they represent are combined into a risk rated bespoke
investment portfolio. For each portfolio we can use the historical rate of return and volatility for
each asset class held within the portfolio to predict the portfolio's anticipated average annual
return and the range of volatility that the portfolio could experience.
The aim is to optimise the asset allocation so as to achieve the highest expected level of return
for a given level of risk.
The table below demonstrates the annual expected return and the range of possible returns for each of our five investment strategies. These figures should not be taken as a projection. They
show the average expected annual return and the range of potential capital gains and losses to two standard deviations, providing investors with a guide that will be accurate 95 times out of
100 outcomes.
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