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Portfolio Risk Suitability
Invest within your Investment Profile
Portfolio Risk Suitability
Benefits at a glance
Additional portfolio diversification options
A more holistic view of your investment portfolio(s)
The opportunity for your portfolio(s) to align with DBS Chief Investment Office's investment strategy
More active monitoring of your investment portfolio's risk levels
Features
WHAT IS PORTFOLIO RISK (PR) RATING?
Your Portfolio Risk (PR) Rating measures the risk exposure of your portfolio.
PR is a score from PR 0 (lower end) to PR 5 (higher end) derived from your portfolio mix of products and their respective Product Risk Ratings (PRR). Your PR is based on weighted average of the PRR volatilities of the individual investment holdings in your portfolio.
WHAT IS YOUR PORTFOLIO RISK RATING (PR) THRESHOLD?
Your PR threshold is based on the investment profile of your portfolio(s).
WHAT IS LEVERAGE FACTOR (LF)?
Your Portfolio Leverage1 Factor (LF) measures the total investment exposure (gross assets2) to your capital (net assets3). LF measures how much you are increasing your investment exposure using borrowings* and/or derivatives on margin instead of your own capital. This factor will be greater than 1 if the total investment exposure is greater than your capital.
WHAT IS YOUR LEVERAGE FACTOR (LF) THRESHOLD?
HOW DOES IT WORK FOR YOU?
A higher PR generally means a higher proportion of your portfolio is in higher risk rated products. In such case, you may wish to adjust your portfolio.
Such portfolio adjustment decisions provide you an investment discipline in reducing risk positions in an up market (when PR increases) and adding investments in a down market (when PR decreases).
While leverage does not tie up your capital, it increases the risk and amplifies any capital loss.
LF provides you an opportunity to review leverage risk of your portfolio and make adjustments to a level that is appropriate based on your investment profile.
*Exclude property, universal life insurance policies and loans secured by such assets as these are not considered as part of your investment portfolio.
Disclaimer
Under our investment suitability framework, your overall Portfolio Risk Rating will be compared against your investment profile based on your responses in the Investment Objectives Setting Questionnaire. Your overall Portfolio Risk Rating is calculated based on the risk rating of each product, its investment amount and its allocation of your overall portfolio taken on a volatilities weighted average basis. Individually, there could be some products in your portfolio with risk ratings which may exceed the threshold for your investment profile. However, your overall Portfolio Risk Rating should not exceed your investment profile. Higher investment amount and allocation of your portfolio to products with higher risk ratings will increase your Portfolio Risk Rating, and may result in your investment risk exceeding your investment profile. Likewise, lower investment amount and allocation of your portfolio to products with higher risk ratings will reduce your Portfolio Risk Rating.
1Leverage amplifies the risks in your portfolio in terms of both potential gains as well as potential losses would increase in proportion to the degree of leverage employed. By taking on leverage, you accept that you may lose a significant part, or all, of your capital, and are prepared to make good any losses over and above the principal you invest in certain cases.
2Gross Assets comprise cash, investments, notional amount of outstanding derivative transactions (without consideration of netting effect of any offsetting foreign exchange transactions) and mark-to-market gains or losses from outstanding derivative transactions.
3Net Assets comprise cash, investments, mark-to-market gains or losses from outstanding derivative transactions minus loans.
Real property, universal life insurance policies and loans secured by such assets are excluded from the computation of Gross Assets and Net Assets.
Where loans are secured by assets held in a separate account or portfolio, the Leverage Factor may not take into account the full value of such other assets.
Leverage Factor accounts for both implicit leverage (e.g. derivatives on margins) and explicit leverage (e.g. loans). The Leverage Factor threshold should not be construed as a recommendation as to leverage levels. It serves as a reminder to clients not to take excessive leverage beyond the specified threshold applicable to their investment profiles. As leverage may result in the leveraged return volatilities increasing beyond the underlying asset volatilities (unleveraged return volatilities), clients should assess and understand the risks of leverage before incorporating any form of leverage in their portfolios.
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