Risk versus reward

With most investments, the higher the risk, the higher the potential rewards. There is a degree of risk in all investments and in extreme circumstances you could even lose all your money. Because no two investment trusts are the same, it is not easy to make a precise assessment of risk when it comes to the performance of markets, sectors and companies. Markets are inherently unpredictable. Sectors that look unhealthy may start performing strongly and steadily, and companies that look dominant may suddenly reveal weaknesses.

Most investment literature contains details of past performance showing how an investment has performed to date. It is crucial to note that this is no guide or guarantee of how the same investment may perform in the future. You should never buy an investment trust purely on the basis of past performance without considering other factors, such as the trust's operating costs, the level of risk, your investment objectives, the type and size of the trust and so on.