Risk Tolerance Levels

Low: Willing to accept minimum fluctuations in asset value and very limited volatility. Guaranteed products such as GIC’s and money market funds are well suited to this level. Bond funds may also be appropriate, as may a limited exposure to asset allocation funds, for example

Moderate: Willing to accept moderate market fluctuations with potential for loss. This category of investor accepts that market exposure comes with the risk of downward movement. They accept that investments they make are either longer-term in nature and will very likely perform over time, or, if shorter-term in nature, are unlikely to have a significant impact on their net worth. Many mutual funds would generally be appropriate for this category of investor if in a diversified portfolio, including specialty funds at a small percentage. A mix of bond funds and equity funds is most appropriate, as are balanced funds and asset allocation products.

High: Willing to endure wide swings in market fluctuations and to withstand losses in asset value. Client recognizes that to obtain superior returns, they must generally accept the possibility of losing capital, including that of a more permanent nature. They are willing to allow a fair level of volatility and/or accept limitations on the liquidity of their investment. Even this category of investor, however, is generally not willing to place a significant portion of their investable net worth into securities with the risk of total loss of capital. As such, while virtually all forms of securities would be appropriate for this investor, proportions of sector, specialty, and venture capital funds would normally be restricted.