When it comes to investing, risk is often confused with volatility.

But should strong positive returns really be viewed as “risky” in the same way as losses?

Traditional risk measures treat both upside and downside movements equally, even though investors are far more concerned about losing capital than outperforming expectations.

This is where downside risk becomes important.

In our latest article, we explore why the Sortino Ratio has become one of the most insightful measures of risk-adjusted performance — focusing specifically on negative returns and the outcomes investors are trying to avoid.

It’s also why the Raging Bull Awards place significant emphasis on the 5-year Sortino Ratio when assessing fund performance — recognising that managing downside risk matters just as much as generating returns. Based on their current Sortino Ratios, all four of our GraySwan Funds are currently ranked in the top quartile of their respective unit trust multi asset peer groups.

Understanding the difference between overall volatility and downside risk can completely change how investors evaluate long-term portfolio quality, consistency, and risk.