Andrew Morris: Risk and return have been distorted

Last month, we discussed some research that indicated daily rebalancing delivered the best performance outcome for risk-targeted solutions. The results also threw up something else very interesting, however - namely how do we define risk and return? As an example, arguably the leading driver of investment returns since the financial crisis has been rock-bottom interest rates. Globally, central banks sought to use monetary stimulus to pump money into the system, attempting to alleviate the economic distress caused by the credit crunch, which raises the question - does ‘safe' then mean ‘sa...