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Investment risk Chapter 6
Figure 6.7 highlights the importance of looking at the specific risk rating (volatility) of any particular
fund in which you are interested. The sector overlap in the risk spectrum is such that fund selection
by sector is too crude to be reliable.
Figure 6.6: Annualised volatilities of asset allocation categories (excluding outliers)
The above figure shows the volatilities of the major asset allocation categories for all rand-denominated funds compared to first-tier South African
funds, outliers excluded. (3 years to end January 2026).
Figure 6.7: Annualised volatilities of unit trust categories (excluding outliers),
3 years to end January 2026
Max drawdown
Maximum (max) drawdown (often shortened to max DD or MDD) is a risk measure that expresses
maximum loss on a peak to trough basis. A related figure, drawdown duration, is the longest time an
investment took to regain a former peak.
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