But I do believe it is important to understand the concept. I’m not suggesting investors need to start calculating Sharpe ratios or other sophisticated metrics for their portfolios. Risk-adjusted returns are often presented as a ratio, with higher readings typically considered desirable and healthy. Risk-adjusted return is a calculation of the return (or potential return) on an investment such as a stock or corporate bond when compared to cash or equivalents. I view risk-adjusted returns as perhaps the most important, least understood part of investing after all, the return potential of any investment should be viewed in the context of the risks it takes to achieve that return. Risk-adjusted return is a critical element to successful long-term investing, and one often overlooked - or misunderstood - by newer investors.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |