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Risk premium

Correctly identifying risk premium is critical for optimising asset allocations and depends on investment term, benchmark and prevailing market conditions. Unlike simpler models that may represent risk premium by a single number, the EV Asset Model explicitly models risk premium so that it varies dynamically with market conditions and investment term

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Risk premium

The chart shows how expected risk premium varies with investment term for various asset classes. Risk premium is defined in terms of returns in excess of those of the cash asset and is calculated as the mean of the expected excess growth rate relative to Money Markets.

 
 

Change over quarter

Change in risk premium

The chart shows how the term structure of risk premium has changed over the past quarter. The risk premium is the mean of the expected excess growth rate relative to Money Markets.

 
 

Change over year

Change in risk premium

The chart shows how the term structure of risk premium has changed over the past year. The risk premium is the mean of the expected excess growth rate relative to Money Markets.