The Standard Risk Measure (SRM) aims to help customers decide on a superannuation fund by making clear what the level of risk is.
It is based on guidance from the Australian Prudential and Regulation Authority (APRA) to allow investors to compare investment options that are expected to deliver a similar number of negative annual returns over any 20-year period. Resolution Life has introduced the SRM in accordance with the recommendations from the Financial Services Council (FSC) and Association of Superannuation Funds of Australia (ASFA).
Methodology
The methodology used for calculating the SRM follows the FSC/ASFA recommendations and is in line with market adopted practices. For each investment option, the process determines a set of forward-looking capital market assumptions by forecasting expected yield and growth outcomes for each asset class.
The assumed return outcomes are gross of administration fees, net of Investment management fees and gross of tax. Generally, alpha (outperformance) has been assumed to offset investment management fees, however for some asset classes (where appropriate) a small amount of alpha in excess of Investment management fees is assumed.
For multi sector (or diversified) investment options, a correlation matrix between the asset classes has also been determined using long-term historic data. Both the assumptions and correlations are then used to determine a multi sector investment option's expected risk and return by combining them with its long-term strategic asset allocation.
For each investment option, the SRM is calculated by determining the probability of a negative return based on an expected normal distribution of returns multiplied by 20.
What you need to know
Any advice on this website is provided by Resolution Life Australasia Limited ABN 84 079 300 379, AFSL No. 233671 (Resolution Life), and is general advice and does not take into account your objectives, financial situation or needs. Before acting on this advice, you should consider the appropriateness of the advice having regard to your objectives, financial situation and needs, as well as the relevant product disclosure statement and/or policy document, available from Resolution Life at Resolution Life or by calling 133 731, before making a decision on whether to acquire, or continue to hold, the product.
The Target Market Determinations (TMDs) for our financial products (where applicable) can be found at Target Market Determinations. The TMDs describe the key features and attributes of an applicable product that affect whether it is likely to be consistent with the objectives, financial situation and needs of consumers in the target market.
Resolution Life is part of the Resolution Life Group and can be contacted via Contact us or by calling the phone number mentioned above.
