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Measuring Risk

ADF Super risk measures

Like any investment, superannuation carries a level of risk. The exact amount of risk for your super will depend on which investment option(s) you choose.

The likely risk of losing money and the level of investment return is different for each investment option, and will depend on the underlying mix of assets. Those assets with the highest potential return over the longer term also have the highest risk of losing their value in the shorter term.

Risk can be managed and even minimised, but never eliminated. No matter how skilled the investment manager, or how strong performance has been in the past, the level of returns will vary, and future returns may differ from past returns.

Returns are not guaranteed. There is always a chance you could receive a lower member benefit than you invested. There is a risk the amount of your superannuation benefit (including contributions and returns) may not be enough to adequately provide for your retirement.

When choosing how you invest your super, it is best to make well-informed decisions based on your personal objectives, financial situation and needs. Speaking with a financial advisor is worthwhile.

How is investment risk measured?

Investment risk is measured using the Standard Risk Measure (SRM), which is the standard method used by superannuation funds.

The SRM was developed by the Association of Superannuation Funds of Australia (ASFA) and the Financial Services Council (FSC) at the request of the Australian Prudential Regulation Authority (APRA).

Benefits of using the SRM

The SRM allows ADF Super members to easily compare investment options, both within and between funds, based on the likely number of negative annual returns over any 20-year period.

Depending on the number of expected negative annual returns over any 20-year period, each investment option is classified into a Risk Band. There are seven bands, labelled from very low risk to very high risk.

Risk Band

Risk Label

Estimated number of negative returns over a 20-year period


Very low

Less than 0.5



0.5 to less than 1


Low to medium

1 to less than 2



2 to less than 3


Medium to high

3 to less than 4



4 to less than 6


Very high

6 or more

Limitations of the SRM

The SRM isn’t a complete assessment of all forms of investment risk. For example, it doesn’t provide details on the potential size of a negative return, or if the potential for a positive return will be less than a member may require to meet their objectives.

Calculations don’t take into account administration fees and tax requirements.

It’s important that you’re comfortable with the associated risks and potential losses with your chosen investment option. We recommend you seek financial advice that will take into account your individual circumstances.