Equities have surged for nearly half a year, so it may be understandable if clients seem focused just on returns at the expense of risk. But with the VIX gauge beginning to jump around – it hit 16 last week after hovering around 10 or 11 since New Year’s – advisers can’t just watch as some clients stick their heads in the sand.
Even in times of low volatility, individual portfolios may carry high (read unwarranted) levels of risk. In that light, we collected the equity mutual funds and ETFs with the best risk-adjusted returns as measured by Sharpe ratios. The eyes of many clients may glaze over, but it’s your job to remind them how concepts like risk and standard deviation can affect their savings.
Scroll through to see the 20 funds with the highest three-year Sharpe ratios. All data is from Morningstar.