Measuring risk is a risky business

Article Abstract:

Historical volatility measures are commonly employed to systematically compare and assess different investments or managers. The four widely used variables for measuring the historical volatility of investments are standard deviation, range of returns, multiple sigma events and downside risk. Plan sponsors would do well to apply different risk measures because individual measures only have limited interpretive ability. Common problems that should be avoided are those dealing with issues such as consistency with plan design, time horizon of measurement and special investments, and illiquid assets.

Methods, Risk assessment

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Experts discuss 401(k) investment issues

Article Abstract:

Nine experts on pension management are consulted concerning fiduciary and investment issues. The possibility of employees retiring with inadequate retirement savings may be avoided by having employers provide adequate investment education to employees. The optimum number of investment options in a 401(k) plan may depend upon the plan sponsor. However, investment professionals estimate that about three to 10 investment classes are recommended.

Investments, Salary reduction savings plans, 401K plans

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