However, if it could be done, this quadrant would certainly deliver on the high cost of capital demanded by venture investments in the space: this is high risk, high return domain.
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Small guys, by and large, are laboring under the high-risk, high-return delusion, the professors figure.
High-risk, high-return funds like most of those that New Jersey is selling interests in, control tens of billions of dollars of property world-wide.
REITs offer investors a middle way between the high-risk, high-return vulture funds and stodgy, low-return Japanese property developers, such as those attached to the Mitsubishi, Mitsui and Sumitomo keiretsu.
Ocean Energy brings a whole portfolio of high-risk, high-return projects, from deepwater blocks off the coast of West Africa to one promising field that lies 9, 300 feet below the Gulf of Mexico.
The sales effort is a way to reduce exposure to some of the high-risk, high-return property funds that got scuffed up during the financial crisis, said Timothy Walsh, director of the New Jersey Division of Investment, which manages the state's pension money.
However, the basic rule of finance is that high risk comes with high return.
One reason, argues Ian Maxwell of Schroder Salomon Smith Barney, an investment bank, is that only the biggest firms can afford to get over the high barriers to entry in the high-return, low-risk niches of the mining business: iron ore, alumina, diamonds and industrial minerals.
If you put your whole bond portfolio into the Vanguard index fund, which is mostly in U.S. governments, you have a fairly low risk of default but a fairly high risk of not achieving a positive real return.
There are few, if any, investments offering as high a risk-adjusted return as a public pension.
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One big one is the low return, high risk of these investments, which could discourage widespread participation.
Furthermore, this long-term return, high risk, engineering-lead venture, was financed by - wait for it - the City.
"It would have to be a high return to justify the risk, " says Lindel Eakman, managing director of UTIMCO's private investments.
The return on such high-risk, often illiquid investments can be great when the market is going great.
But even if asset returns are estimated accurately, the high expected return reflects the greater risk inherent in equity investments.
Typically mutual funds is where we are looking at quite substantially right now for really one reason, and those tend to trend better with a lot less risk, so you know you can have market-like rate of return on high-yield-bond mutual funds with historically a third of the downside risk of the markets.
First, a high valuation increases your risk and lowers your potential return, regardless of how it compares to the historical average.
The lenders thus give up a potentially high pure equity return, but have less risk.
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Insurers were eligible to get funds in return, if a large portion of their enrollees were high-risk and expensive.
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This assumes that in retirement the couple switches to a lower-risk, conservative portfolio of government and high grade corporate bonds earning on average a real return of just 3%.
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The PIMCO Total Return Exchange-Traded Fund (BOND) is a diversified portfolio of high quality bonds that is actively managed in an effort to maximize return in a risk-controlled framework.
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