Education

Understanding the Risk-Reward Spectrum

Learn how various investments offer incremental opportunities for potential returns while still mitigating market risks.

In uncertain markets, investors may hold larger than usual amounts of cash. Incremental “step-ups” in risk can potentially enhance returns while still managing volatility.

What this chart shows

Financial assets have unique risk-reward profiles. While cash carries the least risk, it also has the lowest return potential. Depending on their risk tolerance, investors can also look to bonds and equities for greater income or capital appreciation potential.

What it means for investors

No investment is truly risk free. While cash protects principal, it is subject to inflation risk and its low returns may hinder you from reaching your financial objectives. You can step up your reward potential by prudently diversifying into riskier assets, which can help mitigate volatility while also keeping goals on course. However, it cannot assure a profit or protect against loss.

Tell us a little about you to help us personalize the site to your needs.

Financial Advisor I'm a broker dealer or registered investment advisor. I'm looking for investments for my clients along with timely insights.
Institutional Investor I'm an institutional investor looking to review investment strategies, timely insights and connect with my PIMCO relationship management team.
Individual Investor I'm an individual investor looking for investment solutions for myself along with timely insights from PIMCO.

Terms and Conditions

Please read and acknowledge the following terms and conditions:

I acknowledge that I have read and understand this agreement, have the authority to enter into this agreement, and agree to comply with and be bound by its terms.

Select Your Location

Americas