Storebrand Verdi: Suitability

The Storebrand Verdi Fund is suitable for those with a long-term investment horizon (10 years or more) and who wish to have an exposure to value stocks in the Norwegian equity market. Such companies are usually found in shipping, offshore, finance and cyclical industries in general, and are characterised by relatively stable and predictable cash flows. The Fund’s portfolio typically consists of 20-25 stocks, and the risk is generally lower than the average of the stock market.

The Fund is suitable in an aggressive strategy where all investments are allocated into equities. This strategy should, in general, only be considered if you have an investment horizon of 10 years or more. However, the fund may also be suitable in a balanced strategy where investments are allocated into a mix of equities and bonds when you have at least 6 years to retirement. The fund is on the other hand not suitable in a cautious strategy consisting of bonds and cash or in a safe strategy with only cash.

Stock market investments (equities) are more volatile than cash or bonds and so their value is prone to fluctuation. Year on year returns are likely to vary more dramatically, possibly delivering negative returns in some years. Conversely, equities can perform better than cash or bonds in some years and equities provide, in general, a better overall rate of return over a long period of time. However, this is not guaranteed.

Investing for retirement, as with all investment opportunities, is about balancing performance against risk. The tolerance to risk will depend on a whole range of factors; for example, whether or not other savings exist to fall back on. However, the most important consideration is likely to be age and time remaining until retirement. A younger investor may typically be more likely to invest in equities. As the time to retirement approaches, the investor may look to consolidate gains by switching equities into less volatile investments such as bond and cash funds.