FMA risk indicator
Risk indicator (1–7 scale)
A standardised 1–7 risk score every NZ retail managed fund must publish, calculated from the fund's price volatility (standard deviation of weekly returns) over the past five years.
The risk indicator is a standardised numerical score from 1 (lower risk) to 7 (higher risk) that every NZ retail managed fund must publish in its Product Disclosure Statement and every Quarterly Fund Update.
It is calculated from the standard deviation of the fund's weekly returns over the past five years and mapped onto the 1–7 scale using FMA-prescribed thresholds. Funds with less than five years of price history use a peer or benchmark proxy and disclose this in the PDS.
The risk indicator measures past price volatility only. It is not a forward-looking risk forecast and does not capture credit risk, liquidity risk, currency risk, or concentration risk in any direct sense — these belong to the PDS narrative-risk disclosures.
Typical mappings: a cash fund is usually 1, a NZ fixed-interest fund 2–3, a balanced diversified fund 3–4, a growth diversified fund 4–5, an international-equity fund 5–6, and a concentrated single-country or thematic fund often 6–7.
Primary sources
Related terms
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QFU · Fund Update
Quarterly Fund Update (QFU)
A standardised FMA-mandated quarterly report each NZ retail managed fund publishes, summarising fees, returns, risk indicator, asset mix, top-10 holdings and fund size.
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PDS
Product Disclosure Statement (PDS)
The headline legal document a NZ managed fund or KiwiSaver scheme provides to retail investors, summarising the fund, fees, risks, and how to invest.