Risk meter not suitable for all unit funds

The risk meter is less suitable for unit funds that invest in illiquid assets when it comes to providing investors insight into the risks they run. The indicated risk is generally lower than in actuality. The risk meter does provide sufficient insight into the risks for other types of unit funds. This is concluded by the Netherlands Authority for the Financial Markets (AFM). The AFM is calling on the managers of such unit funds to no longer include the risk meter in advertisements.

What type of funds are involved?

The common characteristic of unit funds for which the risk meter is less suitable is that they directly or indirectly invest in investments that are not or hardly traded. This limited or non-existent trade means that the fluctuation of the historical return, or volatility, of the investment is low. It is precisely the volatility that determines the outcome of the risk meter. The lower the volatility, the lower the reading on the risk meter – in contrast to funds that invest in listed securities, for example.

A low score on the risk meter that has been calculated entirely in accordance with the rules provides only a limited image of the main risks in such cases. It is therefore important precisely for this type of fund that investors consult information such as the prospectus and the Essential Investor Information. The main risks are reported therein.


The AFM requests managers of collective investment companies that invest in illiquid assets to stop using the risk meter in advertisements, because the use of the risk meter in these specific cases may provide an image of the main risks that is too limited. The AFM requests that the announcement 'Do not run unnecessary risks. Read the Essential Investor Information' is included.

If parties doubt whether this request applies to the collective investment companies for which they advertise, they can contact the AFM at Also consult our Q&A. The supervisor will also approach parties for whom the risk meter is less suitable and request them to no longer use the risk meter in advertisements.

Adjustment of regulations

The AFM is consulting with the Ministry of Finance concerning possible adjustment of the regulations pertaining to the representation of investment risks. It will consult the market where necessary.

The AFM is committed to promoting fair and transparent financial markets.

As an independent market conduct authority, we contribute to a sustainable financial system and prosperity in the Netherlands.

Share information

Share on: Share this