The Chelsea Risk Rating is simply a generic guide to the relative risk of funds within the market. It is up to you to determine your optimum asset class mix. The Chelsea Risk Rating is shown in the form of a thermometer (below) and is based on our in-house research. The Chelsea Risk Rating attempts to quantify the relative risk of funds, to give you an idea of how risky one fund is versus another.

A fund rated 5, in the middle of the spectrum, does not mean it is suitable for medium-risk investors, merely that according to historic volatility, and our understanding of the manager’s investment process, we think it is more risky than a fund rated 4 and less risky than a fund rated 6. Even funds rated 1 are subject to risk.

This is a simple illustration of where various sectors sit on the Chelsea Risk Rating scale. It depicts the relative risk of those sectors. Please note that even those sectors at the lower end of the scale are subject to volatility. It is based on long-term historic volatility, so does not take into account current relative valuations of different sectors.

Have a read of our Fund Review and see the full list of over 400 funds which we risk rate.

Our Selection and Core Selection also show the Chelsea Risk Rating for the funds listed there.

Please note: Risk profiling is also subject to your own circumstances and, if you need advice, please speak to a financial adviser.

To some extent risk is subjective, for instance a cautious investor, who is uncomfortable with volatility, might consider a fund that is risk-rated 5 to be at the top end of their risk spectrum. So the Chelsea Risk Rating is simply a generic guide to the relative risk of all funds within the market.