Low Risk, High Reward?

It’s one of the most widely accepted tenets of investing: More risk means more reward. But noted researcher Roger Ibbotson says that’s often not the case. Ibbotson tells Morningstar that, while the higher risk/higher reward concept seems to play out when comparing different asset classes, his research has found that it’s a different story within asset classes. “In every category we looked at — and we actually looked at six different categories here — and in every one of the categories we find this relationship that within an asset class, we get this reverse relationship. We find that in fact that it’s the low-risk portfolios that actually do the best.”

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