What is your investor profile?
All investments are subject to varying risks and their value can go down as well as up. Different types of investments perform differently at different times and have different risk characteristics and volatility.
A cardinal rule of investing is that the more secure an investment is perceived to be at its outset, the less is the expected return.
Investing in a portfolio which spreads its risks across different securities or different types of assets (often called diversification) is a common way to reduce risk.
As the default option, the conservatively structured Australian Ethical Balanced Trust/Strategy represents a middle road in terms of risk and reward. For those with a longer term investment horizon (eg. younger people) the Equities and Large Companies Share Trusts and Strategies may offer a desirable choice.
Even for those nearing (or in) retirement it may be prudent to incorporate a proportion of growth assets (shares and property) in order to maintain purchasing power and keep pace with inflation. There are some growth assets in the Balanced Trust/Strategy and more in the Equities and Large Companies Share Trusts/Strategies. After all, even in retirement your superannuation may need to last 20 years or more.
| Investment trust / Super strategy | Objective | Suits investors who are: |
| Balanced | balance between capital growth and income | willing to risk negative returns but not a significant loss of capital in one year |
| Equities | long-term growth | willing to take a higher risk with prospect of higher returns over time |
| Large Companies Share | long-term growth | willing to take a higher risk with prospect of higher returns over time |
| World | long-term growth | willing to take a higher risk with prospect of higher returns over time |
| Income | competitive income with minimum risk of capital loss | risk-conscious, short term |