For some pension accounts and salary exchange accounts, a forecast for future returns is simulated in a graph. The graph is intended to give you an indication of how the account's future development will be. It is, however, important to point out that it is just an indication and not a guarantee of future returns.
Nordea Node’s simulation is based on established statistical models and takes the following into account:
- Each asset's historical risk/volatility (if an individual asset has only been in existence for a short time, it will be removed from the simulation so as not to be misleading)
- Each asset’s historical movement in relation to various broad market indices
- The historical development of several broad market indices
On the basis of the above, a risk and expected return is calculated for each asset. Everything is then put together and the investment fund portfolio's various expected outcomes are presented to you in a graph.
The middle line represents the expected return. The upper and bottom lines represent a range within which 80% of all outcomes should end up. In other words, there is a probability of 90% that you should get a higher amount than the bottom line – according to the simulation.
