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Expected Risk percentage

Jay Gourley

What does expected risk x% mean? Does it mean that the standard deviation of the generic asset allocation (not my asset allocation) has been within a range of x percent over some time period that only the programmer knows? That's just a guess to make answering easier. Where is that guess wrong?

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Comments

Jay Gourley

Correction: Where I posted "not my asset allocation," I meant "not my specific investments".

q_lurker

I think your standard deviation reference is in the right direction, but can't swear it is wholly accurate. Have you followed the "Show Allocation Guide" button on the Investing / Allocation tab? (I suspect that is where you are seeing the "Risk%" values.

In that context, I see Risk% for Actual and Target. I believe the bottom-line number represents a weighted averaging of the risk associated with your actual or target portfolio for each of those 7 or 8 asset classes. Domestic bonds has a risk of X% and you have 20% of your actual portfolio in Dom Bonds; Y% risk for Small Caps, you have some weighting in that class. Multiply and Add to get the total.

Same sort of weighted averaging would apply for the Return% values.