Risk and return pushing investors wider of the mark

Investor expectations have still not moved in line with what is today seen as a ‘reasonable’ rate of return and the changing levels of risk to achieve them, meaning portfolios are looking at a far broader range of asset classes to even hit what experts think is ‘reasonable’.

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      “A reasonable rate of return suggests not taking too much risk,” says Chris Kenny, a partner at Smith & Williamson Investment Management, yet with inflation eating away at capital any return above inflation could be seen as a reasonable outcome.

      With core asset class returns as they are – cash is talked about in terms of a return of capital rather than a return on capital – even beating inflation means taking a greater level of risk. However, in an interview with Portfolio Adviser, Kenny argues that rather than taking more risk he is simply taking different risks.

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