Most investments have a PDS explaining the general and specific risks of a financial product. This might include risks related to the industry a company is in, or the markets it operates in. See types of risk. The PDS also:
- provides information about who is managing the investment,
- explains how the product is structured, and
- gives information about how you can get your money back.
To learn more, see Product Disclosure Statements.
Check the risk indicator
All managed funds (including KiwiSaver funds) must include a risk indicator in their PDS. Risk indicators are a standardised measure of how likely the fund’s value will go up and down over time (volatility). You can use the risk indicator to compare different funds.
Generally, if a fund invests in a high proportion of shares and property, the risk indicator will get higher when markets are more volatile. Funds with a higher proportion of cash and bonds generally have a lower risk indicator.
Check the credit rating
Some investments (such as bonds) have a credit rating. They help you understand how likely it is that interest will be paid on time and you’ll get your money back when your investment reaches the end of its term.
Ratings are issued by independent agencies such as Standard & Poor’s, Moody’s and Fitch. These agencies have different credit rating systems and are just one factor you need to take into account. See credit ratings.
Do your own research
Remember a PDS is a sales document. Check what you’re reading through conversations with financial advisers and friends, your own online research, and reading business publications.
If there is no PDS this is a warning sign an investment may be high risk. See our avoid scams page for details of how to check your investment is legitimate.