Selecting the right type and level of risk is key to fund outperformance

With volatility having increased this year, Newton Investment Management's Nick Clay asks what type and level of risk is one willing to assume to generate the required level of income?

Policymakers see accelerating growth as requiring more economic intervention, market manipulation and regulation. This has led to increased volatility, inflated asset prices and poor capital allocation, which in turn has affected equities and pushed up all valuations. The key question is therefore what type and level of risk is one willing to assume to generate the required level of income? If strategies promise income levels that are not appropriate to the investment universe, investors are likely to have to move further up the risk curve in pursuit of higher gains to fulfil that promis...