Fund risk ratings

Every investment option has a level of risk, so it's important to understand this before you make your investment choices.

Why is understanding risk important?

When it comes to investing your money for retirement, how much risk you’re willing to take for a potential reward is a balance.

How you choose to invest your money – along with how those investments perform – could have a big impact on the value of your BRASS or AVC Extra pot in the future.
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The Scheme offers a range of investment funds for you to choose from. Affecting the level of risk involved, the funds vary in the types of assets they invest in:

  • bonds
  • share
  • cash
  • multi-asset

Generally speaking, the higher the risk rating, the higher the expected return over the long term. However, this also means the bigger the expected rises and falls in value will be along the way. On the other hand, lower risk funds may seem like the safe, steady options, however if your investments don't grow over time, inflation could eat into the value of your savings.

Risk and reward is a balance. When choosing your investments, consider how much risk you’re willing to take, the expected returns, and how long you have until you plan to take your pot.

Lifestyle strategies invest in a mix of the investment funds listed below but their allocation to each changes over time, moving into lower-risk funds as you near your Target Retirement Age.

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Did you know?

All investments can experience rises and falls in value – this is known as ‘volatility’.

High-risk funds
(Global Equity Fund, Long Term Growth Fund, Socially-Responsible Equity Fund)

Investors in high-risk funds can expect to experience sharp rises and falls in value in the short term, but see above average growth over the long term. High-risk funds typically invest in things like shares (equities). This means they are more likely to be affected by changes in the economy and stock markets.

Medium-risk funds
(Corporate Bond Fund, UK Government Fixed-Interest Bond Fund, UK Government Index-Linked Bond Fund)

Investors in medium-risk funds can also expect to experience rises and falls in value in the short term, but to a lesser extent than high-risk funds.

Over the long term, they would generally expect lower returns than those produced by a high-risk fund. Medium-risk funds often invest in bonds, managed in a low-activity way, aimed at strengthening and sustaining fund value over the medium term.

Low-risk funds
(Deposit Fund)

Investors in low-risk funds should expect low growth over the short and long term. Although that means you’re less likely to experience the extreme highs and lows, low risk doesn’t mean no risk. If you save in a low-risk fund for a long time, there is a high risk that the value of your investments are unlikely to keep up with the cost of living (inflation), which makes them unsuitable for long-term investors.

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What's your attitude to risk?

Risk isn’t necessarily bad for you. All funds carry some risk. Your investment choices depend on your attitude to risk - how comfortable you are taking risks with your money. Only you can decide how much risk you're willing to take.

When choosing your investments, consider how much risk you’re willing to take, given the expected returns, and how long you have until you plan to take your pot.

To help you understand your own attitude to risk, take a look at our video.

Where to go for advice

We strongly recommend you speak to an Independent Financial Adviser (IFA) before making any decisions about your financial future.

The Scheme’s administrator, Railpen, has appointed Liverpool Victoria (LV) to provide advice to all RPS members. LV will be offering its services at a discounted rate for RPS members.  Alternatively, you can also find a list of IFAs in your area at unbiased.co.uk.

You can find more information on the guidance and advice page.

What to read next...

BRASS fund choices 

Learn more about the different investment options available to you within BRASS.

How investments work 

Understand what happens to the AVCs you pay into BRASS and AVC Extra and the choices you can make.

Guidance and advice

Where to find more support about your pension.