What are the risks involved with Simple Plus?
Simple Plus is a cash management portfolio, so by default it’s considered an ultra-low risk investment.
When constructing Simple Plus, our investment team made sure that the portfolio has an optimal risk-reward ratio. That means the portfolio simultaneously provides you with the best rate possible and protects the downside of your cash. We do this by choosing an intelligently diversified mix of high-quality short and ultra-short duration bond funds, and by selecting the most reputable funds with strong track records.
The minimal, yet calculable, risk comes from:
- Allocation to short duration bonds in the mix which makes the portfolio slightly more sensitive to interest rate movements and economic conditions
- Some underlying funds having a time to maturity and duration, and higher credit risk
Because of these factors, we recommend you hold your cash in Simple Plus for at least 12 months in order to reap the full benefits of higher rates while keeping risk in check.
That being said, the historical maximum drawdown for Simple Plus is -2.32% as of 30th of June 2022. This means that even in the worst possible scenario, this portfolio hasn't lost more than 2.32% in value from a particular highest point to its lowest point (from peak to trough).
You can read more about the types of underlying funds in different cash management options and their associated risks here.
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