A fund that specializes in gold may have a low beta because its returns are primarily tied to the price of gold and gold-mining stocks rather than the overall market. Bond prices move in the opposite direction of interest rate changes. Similarly, this bond fund will gain about 6.5 percent if rates drop by one point. In other words, about 3.3 times as much interest-rate risk. While duration is helpful, it's not the sole gauge of bond risk.
Some organizations publish their own proprietary measures of risk.
For example, in contrast to risk statistics such as standard deviation and beta, which measure both the ups and downs of investment returns, Morningstar, Inc., calculates how far the returns of mutual funds and variable annuities fall short of the returns of supersafe U.S. Treasury bills. It can serve as a rough guide if you also keep in mind that past performance is no guarantee of future results. Although it's always possible that 1995's returns will reoccur, a look at the historical record shows that 1995's results were out of line with their historical averages over various time periods Chapter 3 . For the performance history of TIAA and CREF accounts and selected financial markets, you might want to review our booklet Perspectives on Performance .