Return is often the hottest topic when talking about investing, but its counter part -risk- is all to often overlooked. The facts are simple: risk and return are related. For any level of risk there is a return that is, "there for the taking," meaning if you are willing to accept a certain amount of risk, you are entitled to a certain amount of return.

The chart below illustrates The Efficient Frontier. The plotted line is The Efficent Frontier.  As you move along the line from left to right, the risk of the portfolio increases along with its return. For any level of risk there is a corresponding level of return. These returns represent what the global markets have returned over time and not an active manager picking and choosing which stocks to buy.

If you choose active management, the possibility exists that returns may exceed those plotted along the curve.  Investors, however, also take the chance of ending up below the line.  There have been many studies conducted to illustrate where active managers fall compared to this line.  The results of those studies have showed that 85% of active managers fall below the efficient frontier.