AMWatch

No free lunch in finance as so-called safe funds follow market into sharp decline

Nordic-based funds with names that could indicate that clients' money is safe under market turmoil have proved themselves to be anything but risk-free. In fact, one fund titled 'Safe' lost more than a third of its value in the past month. A year ago, a Swedish asset manager was fined for using a name for a fund that could indicate that the fund was a safe investment.

Photo: Thomas Borberg

After a decade of historically low volatility, investors might have started to believe that they were getting a free lunch and that reckless risk taking could equal riskless profits.

The past month, however, has once again shown that there's no such thing as risk-free investment - especially as the stock-bond correlation turned positive.

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