Low risk should not be taken to mean no risk

While most active fund managers measure risk relative to a benchmark, for investors, outperforming a benchmark by 1% or 2% when the value of the market has fallen by 10% offers very little comfort

Savers seeking a safe haven from the volatility and low returns of the world's stock markets should remember one thing: low risk does not mean no risk. Facing a third year of negative returns, with low inflation and instability looming in the property market, the promise of a steady income return might look very attractive. What every investor should consider is how low the risk profile needs to be before they feel secure and how much prospective upside they are willing to forego to retain that security. Risk is measured in many different ways. For most active fund managers, it is risk...