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Sunday, June 04, 2017

Risk and Return requirements of the Investor


Risk-return trade-off - Risk and Return requirements of the Investor.


1. Investors seeking a high rate of return for their portfolios can hold a dominant portion in growth assets, which provide a high return, but also feature higher risk.

2 . Investors seeking a low level of risk in their portfolios can primarily choose income assets, which also provide a low level of return.

3 . The portfolio of an investor is optimised when he invests in products with the lowest level of risk for a given level of return; or one with the highest level of return for a given level of risk.

4. The investor's risk appetite and the level of downside risk he is willing to take, is a critical component of portfolio construction.

5. Asset allocation is the formal process of constructing a portfolio that meets the risk and return requirements of the investor.


Courtesy : Centre for Investment Education and Learning (CIEL).


Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.
Risk and Return requirements of the Investor Reviewed by S. Chitra on June 04, 2017 Rating: 5 Risk-return trade-off - R isk and Return requirements of the Investor.  1. Investors seeking a high rate of return for their port...

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