At first glance, the T. Rowe Price Long-Term Treasury Index (PRULX) produced betas around 1. This means that the amount of risk of the asset was around the same as the amount of risk of the market. Risk for treasuries is static and contain little to no volatility. Using this as the basis, we can see how the betas of the other funds vary in either direction. For example, the AB Core Opportunities Fund Class A (ADGAX) produced very high betas during the dotcom bubble and invested highly in the technology sector. At the time, many investors were willing to overlook traditional statistics and instead base decisions on confidence in advancements in technology. Generally, technology stocks tend to have beta values that are greater than 1 due to the uncertainty that comes along with it. High beta assets are usually riskier, but there is a potential for greater returns. On the other hand, the rest of the data we uncovered mainly produced betas of less than 1, meaning that they were less risky relative to the greater market. Finally, it is important to note that at the end of the dotcom bubble around 1999 and beyond, beta values return to more stable values. The lesson learned here is that although the market fluctuates, what goes up must come
At first glance, the T. Rowe Price Long-Term Treasury Index (PRULX) produced betas around 1. This means that the amount of risk of the asset was around the same as the amount of risk of the market. Risk for treasuries is static and contain little to no volatility. Using this as the basis, we can see how the betas of the other funds vary in either direction. For example, the AB Core Opportunities Fund Class A (ADGAX) produced very high betas during the dotcom bubble and invested highly in the technology sector. At the time, many investors were willing to overlook traditional statistics and instead base decisions on confidence in advancements in technology. Generally, technology stocks tend to have beta values that are greater than 1 due to the uncertainty that comes along with it. High beta assets are usually riskier, but there is a potential for greater returns. On the other hand, the rest of the data we uncovered mainly produced betas of less than 1, meaning that they were less risky relative to the greater market. Finally, it is important to note that at the end of the dotcom bubble around 1999 and beyond, beta values return to more stable values. The lesson learned here is that although the market fluctuates, what goes up must come