Investing with NFU Mutual

When investing with NFU Mutual it’s important that your investment suits your appetite for risk.

To help you make an informed decision it’s important you have all the information you need. We have provided some of the key considerations below to help your investment journey run as smoothly as possible.

What is investment risk?

Investment risk in simple terms is about the changes in the value of your investment that you will experience when investing. The frequency and range of those changes will depend upon what you invest in and the length of time you hold the investment for.

It is important to understand that all investment carries risk but that certain investments are riskier than others. In general, those investments that have the potential for higher growth also carry the most risk.

The level of investment risk you are prepared to take will depend on your circumstances and reasons for investing, which could change over time.

If you are investing for a long period of time you may be willing to take more risk for potentially higher returns. If you are investing for a shorter period you may choose to take less risk in the knowledge that this may lead to lower returns.

What is our approach to risk rating our funds?

All of our funds are risk rated based on their expected level of volatility over a ten year period.

We believe that using the level of equity exposure in a fund is the most appropriate way to determine volatility. The higher the equity content of your investment the more volatile it is likely to be. This means they will normally experience more frequent, and possibly larger, upward and downward movements in price than lower risk investments.

We look to consistently manage our funds to their risk category over the longer term. This provides customers with a consistent approach.

You can find information on risk descriptors and the funds we have available at each risk level in our guide to investing with us.

How can you manage investment risk?

Accepting that there will always be risk when investing is key. You need to determine how much risk you are willing to take. There are however some important considerations that should form part of any investment consideration.

Think longer term

Investments will go up and down in value over time. If you are able to invest for the longer term then you can take advantage of riding out the peaks and troughs of shorter term volatility. Investing for the longer term can improve the potential returns from an investment as the impact of shorter term volatility can be smaller.


Essentially this is about not putting all your eggs in one basket. You can reduce risk by having a broad spread of investments in differing asset classes, such as holding shares, government and corporate bonds, property, and cash. You can also hold investments of differing sized companies, and invest in different world markets to further diversify your overall portfolio. This helps reduce risk as all asset classes tend to behave differently in different market conditions, which can help reduce the overall volatility of your investment.

Little and often

Making regular contributions to an investment portfolio, can help reduce risk. This is known as pound-cost averaging. You will be buying investments at different points at different prices. In short, pound cost averaging means you end up buying fewer shares when they are more expensive and more when they are cheaper. Over time this drip-feeding can help smooth out the price you pay for your investments.

What other things are there to consider?

All investment carries risk and each investment will have specific risks that can affect its performance and its investment risk. Some of the specific risks associated with investing include:

Inflation risk: the risk that the returns achieved by the fund do not keep pace with inflation eroding the purchasing power of your money. Inflation will have an impact upon the real return of your investment. Find out more about inflation risk and the steps you can take to inflation-proof your finances.

Interest rate risk: fixed interest investments are linked to interest rates. When interest rates rise the capital value of a fixed interest investment can be expected to fall. When interest rates fall the reverse is true.

Currency risk: the risk that currency exchange rates impact upon the performance of the fund.

Credit risk: the risk that issuers of bonds or cash deposits may default on their capital repayment and/or interest payment obligations.

Smaller companies risk: the market for these companies is smaller than for larger companies meaning they may be less liquid (less buyers and sellers than for larger companies) which means price changes could be greater.

Where you invest your money will determine the exposure that you have to these specific risks. You are able to find out more about the risks of any specific investment through fund documentation.

You should be aware that the value of your investment may go down and you may get back less than you invested.

When you contact us we'll explain the advice services we offer and the charges.

NFU Mutual Financial Advisers advise on NFU Mutual products and selected products from specialist providers. 

Financial advice is provided by NFU Mutual Select Investments Limited.