What investors should know about risk-based investment products

IN THE world of investments, risk is often characterised as undesirable but necessary in the pursuit of higher returns. But history has shown us that this investing principle does not always hold true.

The 1997 Asian financial crisis was a watershed for investors who believed that pursuing higher risk would lead to greater returns. Following the crisis, equity investors were faced with two decades of poor and volatile returns while fixed income investors generated better returns with lower risk. This has led to the rise of investment solutions that are oriented towards managing risk while generating more stable returns.

In today's environment where the appetite for risk can be conservative, we will explain three risk-driven investment concepts that investors need to be aware of and the potential pitfalls.