The Synthetic Risk and Reward Indicator (SRRI) was defined in 2009 by the Committee of European Securities Regulators (CESR) with the aim of providing investors with a method of assessing a fund's risk.
The SRRI measures the volatility of the fund. A higher volatility means there is greater uncertainty about the size of the changes in a fund's value. This means that the price of the fund can change dramatically over a short time period in either direction. A lower volatility means that a fund's value does not fluctuate dramatically, but changes in value at a steady pace over a period of time. The table below shows the mapping between the volatility and the SRRI value.
|1||0 - 0.49%|
|2||0.5 - 1.99%|
|3||2 - 4.99%|
|4||5 - 9.99%|
|5||10 - 14.99%|
The SRRI is calculated based on the fund returns over the last 5 years. In the case that a fund is less than 5 years old, the returns of a comparable benchmark is used for the period before the fund was launched. Data provider Morningstar calculate the SRRI value that is available on the rplan site. The score is not available for some types of funds (for example, multi-manager funds).
If you are interested in the maths, you can find out more about how the SRRI is calculated from here.