What are the risks?
As with all investing, your capital is at risk. The value of your IG Smart Portfolio could go down as well as up, and you may get back less than you invest.
It’s also important you understand the risks of the ETFs which are held in your portfolio. Each ETF seeks to track a benchmark, and its holdings are not altered in rising or falling markets. This means that when the benchmark falls in value, the ETF will too.
There are many different types of ETFs and some are riskier than others. The risks of each ETF are dependent on the benchmark the ETF seeks to track (i.e. what the ETF itself is invested in). For example, ETFs invested in emerging markets are often subject to higher levels of volatility than those invested in the developed world, while the price of an ETF invested in bonds is likely to change if interest rates do. If an ETF is invested in a security which is listed in a different currency to that of an IG Smart Portfolio (GBP), your returns will be affected by changes in the foreign exchange rate. If you want to find out more about the ETFs in your IG Smart Portfolio, you can access the ETF-specific tear sheet on our platform, or you can read the Key Investor Information Document.
Each IG Smart Portfolio is properly diversified and holds a range of ETFs. This means that if one ETF falls in value it should have less impact on your portfolio than if you only held a small number. This should lower your overall investment risk, although diversification and asset allocation cannot fully protect you from market movements.