Risk is an important factor in determining the appropriate allocation for an investment portfolio. In order to efficiently manage portfolios of investments, it is vital to manage the risk within them. Standard Deviation identifies the variation from the expected return of the assets and gives investors a mathematical basis for investment decisions.
As risk increases so does the expected return of a portfolio. Conversely, the more risk you are exposed to the greater your potential loss could be. Investors should carefully consider the underlying portfolio’s investment objectives, risks, charges and expenses before investing.