In an effort to lure more private investors, RiskMetrics has added new functionality to its RiskGrades Web site, including a measure of risk-adjusted returns for assets within a portfolio and a premium level of service for financial advisors.
"Many investors fail to understand that return is only half the equation," says Ethan Berman, CEO of RiskMetrics. "It's not until return is weighed against risk that you achieve an accurate and true assessment of how your investments are performing."
Additional features include the ability to apply RiskGrades to stock options and UK fund data. This is in addition to the asset types already covered which include equities, bonds, mutual funds and foreign exchange. The site also includes a series of Risk/Return charts to better illustrate the relationship between the returns achieved and the risk taken. The charts include price history with overlapping historical RiskGrades as well as Risk vs. Return scatterplots which provide an instant snapshot of superior and inferior returns.
"There will be many surprises when investors see how high nominal returns compare with risk-adjusted returns," Berman says. "With the current market direction in considerable doubt, understanding and factoring risk into investment decisions is even more important. We're giving investors the means to ascertain that risk."
Other additions to the site include "risk alerts" which notify customers via an e-mail or a red flag when a portfolio strays from their pre-selected risk tolerance range. Risk alerts can also be triggered when relative risk levels are specified.
By using the advisor-related services, advisors can provide investors with more accurate portfolio and asset level risk analysis and help investors visualise the impact of stressed market conditions on their portfolio. This tool is available for a fee of $1000 per year or 12 monthly installments of $100.
Since its release over the Internet earlier this year, RiskGrades has attracted 22,000 registered users. Simultaneously, RiskMetrics has formed partnerships with several leading online brokers and financial portals to deliver risk information to individual investors.