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Risk/Return Trade-off

It is often thought that to receive higher returns, an investor needs to take on more risk. But is this always true? For the last five years many non-traditional asset classes that are thought to be "riskier" have put forth higher returns with less risk than the S&P 500. The image below shows how 12 different investments compare to one another historically in terms of risk and return over the last five years. Notice, for instance, how managed futures compare to the S&P 500 or how bonds compare to REITs. Investors should discuss the risks and benefits of any of these strategies with their financial advisor prior to investment.

Risk Return Graph

Performance displayed represents past performance, which is no guarantee of future results. The aforementioned indices and indicators are not available for direct investment. The index returns do not reflect any management fees, transaction costs or expenses. Click here for information on the referenced indices.

Source: Calculated by Rydex SGI using data from Bloomberg.com, Barclays.com and standardandpoors.com.

¹ Standard Deviation: A statistical measure of historical volatility of an investment, usually computed using 36 monthly returns. More generally, a measure of the extent to which numbers are spread around their average. The higher the number, the more volatility is to be expected.

Diversification neither assures a profit nor eliminates the risk of experiencing investment losses.

Download a copy of The Real Risk/Return Trade-off for more information.

 

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The alternatives strategies and asset classes mentioned are not suitable for all investors. Many alternative strategies use sophisticated and aggressive investment techniques such as leveraging, short selling and derivatives. The more you invest in leveraged instruments, the more the leverage will magnify any gains or losses on those investments. The use of short selling involves increased risks and costs. You risk paying more for a security than you received from its sale. Theoretically, stocks sold short have the risk of unlimited losses. The use of derivatives such as futures, options and swap agreements may expose an investment to additional risks that it would not be subject to if you invested directly in the securities underlying those derivatives. Additionally, certain alternative strategies tied to hard assets such as commodities, currencies and real estate, may be subject to greater volatility as they may be affected by overall market movements, changes in interest rates or factors affecting a particular industry, commodity or currency, -such as droughts, floods, weather, livestock disease, embargos, tariffs and international economic, political and regulatory developments. No investment strategy can guarantee a return in a declining market. Additionally, an investor could lose all or a substantial amount of their investment. For more information about these strategies and their risks please consult your financial advisor.

This material is not intended to be a comprehensive overview of the subject matters discussed. It is intended to be general in nature and should not be construed as investment advice or a recommendation of any specific security or strategy. Before investing in any of the investment products or strategies discussed, consult with your financial advisor to determine if they are appropriate for your objectives, risk tolerance, income level and investing time horizon.

Rydex SGI offers funds with investment strategies similar to those referenced on GetAlts.com.

Read the fund's prospectus and summary prospectus (if available) carefully before investing. It contains the fund's investment objectives, risks, charges, expenses and other information, which should be considered carefully before investing. Obtain a prospectus and summary prospectus (if available) at www.rydex-sgi.com or call 800.820.0888.

Rydex SGI Funds are distributed by Rydex Distributors, LLC (RDL). Security Global InvestorsSM is the investment advisory arm of Security Benefit Corporation (Security Benefit). Security Global Investors consists of Security Global Investors, LLC, Security Investors, LLC and Rydex Investments. Rydex Investments is the primary business name for Rydex Advisors, LLC and Rydex Advisors II, LLC. Security Global Investors and RDL are affiliates and subsidiaries of Security Benefit, which is wholly owned by Guggenheim SBC Holdings, LLC, a special purpose entity managed by Guggenheim Partners, LLC, a diversified financial services firm with more than $100 billion in assets under supervision.

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