In extremely simplified terms it can be said that the safety and the risk of a capital investment can be compared to the movements of a see-saw. If one side goes up, say safety for example, the other side, return on investment, goes down. High safety components, supported by guarantees, often have to be bought at the cost of reduced opportunity for growth. Risk premiums more or less accrue to the guarantors. On the other hand: the prospect of a top return on investment is often at the expense of a shortage of risk-minimisation factors. As it is misleading to assess the return on investment without any elementary safety factors, CHECK's evaluation of the return on investment goes hand in hand with a minimum standard of safety for a fund. Sacrificing the safety element can result in the loss of the entire capital. Here's a differentiation: the see-saw of safety and risk can have its central point at a high level or a low level (= high or low safety/growth). Here are some examples of the high level: investments with good chances of growth even at a high level of safety (e.g. double-digit figures after tax). It is an established fact that serious funds whose management have a strong position in the market underpinning the fund, for example, with five-year tenancy agreements, have a record of double digit performance after tax (calculation method: internal rate of return). In this case we award a "2" and higher for safety and for the (double-digit) return on investment we also award at least a "2". When the sea-saw is at a low level, on the other hand, the fund will be expensive to enter and the management mediocre. The return on investment will first have to make up for two decades of agreed service fees before the fund reaches the break-even point. In short: the safety is average and the growth is weak. On the basis of the marks awarded for safety and the return on investment we work out an overall mark. In addition to a summary assessment, we aim to take account of various investment criteria

back