In the last 20 years, the volatility of stock income funds has risen sharply as dividend yields have fallen, a study by Lipper Inc. concluded.
Note that the CAGR will depend upon the Mean return in addition to the volatility of the fund (or stock).
Beta measures the volatility of a fund relative to the market by gauging how much the fund's returns move up or down given the gains or losses of its benchmark market index.
This allows investors to determine at a glance both the historical volatility of the fund (by looking at the range between high and low) and where the fund's value stands today as compared to the last year.
The National Council of Real Estate Investment Fiduciaries, the master trade association for all real estate funds, calculated the volatility of opp funds that started in 2003 using quarterly nav data for all known funds of that vintage.
The latter component has the effect of dampening the volatility of the fund, and Mr Peirson favours government bonds over corporate bonds as they are less correlated to equity markets.
For example, to adjust raw performance for volatility risk, we include (where possible) Sharpe ratios, which measure the volatility of the fund's performance relative to the three- month U.S. Treasury bill rate.
Due to the continued volatility of stock markets, Hudick recommends for starters low-cost bond funds, in which the chance of a loss of principal is minimal.
Because of the volatility of Fed funds, an instrument of Federal Reserve Board policy, I hesitated to draw a trend line, but it approximates 300 basis points.
The volatility of these funds was represented to range from 4.1percentto6.8percentcent annually, which is extremely low and more akin to what you expect from a fixed income portfolio, rather than one exposed to stock market risk.
