The average market risk premium in the United States remained at *** percent in 2025. This suggests that the returns that investors expected for their investrments remained the same as the previous year in that country, in exchange for the risk they are exposed to. This premium has hovered between *** and *** percent since 2011. What causes country-specific risk? Risk to investments come from two main sources. First, inflation causes an asset’s price to decrease in real terms. A 100 U.S. dollar investment with three percent inflation is only worth ** U.S. dollars after one year. Investors are also interested in risks of project failure or non-performing loans. The unique U.S. context Analysts have historically considered the United States Treasury to be risk-free. This view has been shifting, but many advisors continue to use treasury yield rates as a risk-free rate. Given the fact that U.S. government securities are available at a variety of terms, this gives investment managers a range of tools for predicting future market developments.

Split into three categories (required, historical, and expected), market risk premiums measure the rate of return investors expect on an investment over the risk that investment holds. In Europe, average market risk premiums (MRP) sit between four and 12 percent. Greece sees hike in MRP Although it has a relatively high market risk premium, Greece has seen its rates significantly decrease since 2020. Greece also saw a *** percent return rate on risk-free investments. The same correlation can be seen with Europe’s less risky countries for investment. With Germany seeing *** percent market risk premiums and *** percent risk-free returns in Europe. Required, historical, and expected Separating the three types of market risk premiums is straightforward. Required MRPs differ between investors, as approaches to investment change and measure the rate of return needed for an investment to be made. Expected premiums look at the rate of return and what they are calculated to come out as, while historical MRPs look back over a period at the average rate of return that investors previously got in the past.

The average market risk premium used in Russia was the highest in 2025, reaching a value of ** percent in that year. The lowest market risk premiums used in that year were in France and Japan, at *** percent respectively.

Market risk premiums (MRP) measure the expected return on investment an investor looks to make. For potential investors looking to add to their portfolio, the perfect scenario for a risk-based investment would be a high rate of return with as small a risk as possible. There are three main concepts to MRPs, including required market risk premiums, historical market risk premiums, and expected market risk premiums. United Kingdom shows little return for risk Europe-wide, Finland had one of the lowest MRP alongside Poland and Germany. Ukraine had average risk premiums of *** percent in 2025. Having a lower market risk premium may seem bad, but for countries such as the UK and Germany where rates have been consistent for several years, it is because the market is stable as an environment for investment. Risk-free rates Risk-free rates are closely associated with market risk premiums and measure the rate of return on an investment with no risk. As there is no risk associated, the rate of return is lower than that of an MRP. Average risk-free rates across Europe are relatively low.

Index Time Series for Franklin Liberty Systematic Style Premia ETF. The frequency of the observation is daily. Moving average series are also typically included. The fund seeks to achieve its investment goal by allocating its assets across two underlying alternative investment strategies, which represent top-down and bottom-up approaches to capturing factor-based risk premia. Through the two strategies, it may invest in or obtain exposure to: (i) equity securities (which may include common stocks and preferred stocks), (ii) debt securities (which may include bonds, notes, debentures, banker's acceptances and commercial paper), (iii) commodity-linked derivative instruments and (iv) currency-related derivative instruments.

The average market risk premium in Canada was *** percent in 2024. This means investors demanded an extra *** Canadian dollars on a 100 Canadian dollar investment. This extra cost should compensate for the risk of an investment based in Canada. What causes risk? As far as country-specific factors are concerned, macroeconomic trends can cause risk. For example, the inflation rate in relation to other countries can change the relative value of an investment. Lower inflation in Canada could weaken the Canadian dollar, reducing the value of Canadian assets in terms of another currency, such as the euro or U.S. dollar. The Canadian context As a country, Canada has a fairly high national debt. Some economists point to this as an increased default risk, since debt servicing can become costly. However, most investors agree that Canada, as an advanced economy, is creditworthy and not at risk of defaulting. A better measure is to look at Canada’s risk premium in the context of interest rates from other countries. These deposit rates can be used as a baseline for the market risk premium of other countries, though they do not include all the factors that have been used to calculate this statistic.

This is the replication package of the paper "Investor Attention and Art Investment Returns: The Role of Noise Trading Risk Premium".

The value premium is a widely documented anomaly that has two primary but conflicting explanations; higher fundamental risk and irrational investor behavior. This study examines the premium by calculating the performance of various value investing strategies for the periods of 2001 to 2011 as well as 1991 to 2011. It is observed that value portfolios sorted on the price-to-earnings (P/E) and price-to-cash flow (P/CF) ratios produce statistically significant premiums, with a geometric average return premium of nearly 20 percent for value over growth. Further, contrary to prior research, for both periods examined the book-to-market (B/M) ratio does not successfully sort outperforming value stocks. Instead both B/M value and growth portfolios deliver high returns in excess of the market. Size also proves to be a significant determinant of return, where excess returns are implied for small capitalization firms. When the riskiness of value versus growth is examined, value does not prove to be riskier than growth by traditional risk measures. This, along with strong reversion of P/E and P/CF value stocks in the year post portfolio formation, suggests a behavioral interpretation for the premium where investor overreaction and limits to cognitive information processing add to deviations from underlying value.

We present a consumption-based model that explains a wide variety of dynamic asset pricing phenomena, including the procyclical variation of stock prices, the long-horizon predictability of excess stock returns, and the countercyclical variation of stock market volatility. The model captures much of the history of stock prices from consumption data. It explains the short-and long-run equity premium puzzles despite a low and constant risk-free rate. The results are essentially the same whether we model stocks as a claim to volatile dividends poorly correlated with consumption. The model is driven by an independently and identically distributed consumption growth process and adds a slow- moving external habit to the standard power utility function. These features generate slow countercyclical variations in risk premia. The model posits a fundamentally novel description of risk premia: Investors fear stock primarily because they do poorly in recessions unrelated to the risks of long-run average consumption growth.

The datasets for the Role of Financial Investors on Commodity Futures Risk Premium are weekly datasets for the period from 1995 to 2015 for three commodities in the energy market: crude oil (WTI), heating oil, and natural gas. These datasets contain futures prices for different maturities, open interest positions for each commodity (long and short open interest positions), and S&P 500 composite index. The selected commodities are traded on the New York Mercantile Exchange (NYMEX). The data comes from the Thomson Reuters Datastream and from the Commodity Futures Trading Commission (CFTC).

Market risk premiums (MRP) measure the expected return on investment an investor looks to make. For potential investors looking to add to their portfolio, the perfect scenario for a risk-based investment would be a high rate of return with as small a risk as possible. There are * main concepts to MRPs, including required market risk premiums, historical market risk premiums and expected market risk premiums. In 2025, average market risk premiums in Poland decreased from the previous year to reach *** percent. Greece and Ukraine with the highest MRP in Europe In 2023, Poland was relatively well-placed for average market risk premiums in Europe, compared to other countries. Countries with the highest MRP, and therefore of the highest investment risk included Ukraine and Russia. Poland's risk premiums reached *** percent. Ukraine risk premiums averaged at ** percent in 2023. Risk-free rates Risk-free rates are closely associated to market risk premiums and measure the rate of return on an investment with no risk. As there is no risk associated, the rate of return is lower than that of an MRP. Average risk-free rates across Europe (except for Turkey and Ukraine) were relatively low in 2023. The risk-free rate of investment in Poland was *** percent as of 2023.

Our paper examines whether the failure of unsophisticated investors to rebalance their portfolios can help to explain the countercyclical volatility of aggregate risk compensation in financial markets. To answer this question, we set up a model in which a large mass of investors do not rebalance their portfolio shares in response to aggregate shocks, while a smaller mass of active investors do. We find that intermittent rebalancers more than double the effect of aggregate shocks on the time variation in risk premia by forcing active traders to sell more shares in good times and buy more shares in bad times. (JEL D14, E32, G11, G12)

ABSTRACT This article assesses the impact of alternative assets on the performance of Brazilian private pension funds. Few studies touch on this topic in Brazil and most only investigate the addition of alternative assets and their impact on the performance. The market of open private pension funds in Brazil has been growing rapidly in recent years and gaining much relevance, especially after the announcement of the reformulation of the Brazilian pension system. In 2018, the Free Benefit Generating Plan (PGBL) and the Free Benefit Generating Life (VGBL) represented more than 94% of total assets in their sector. The Brazilian specially constituted investment funds (FIEs) of PGBL and VGBL private pension plans are characterized by their dependence on fixed income assets. Brazil currently faces an unprecedent low interest rate scenario - which, following a worldwide panorama, seems to be set for a long time - and pension fund managers must search for alternative investments that aggregate both risk premia and diversification. The results of this study may support managers in this little-discussed matter. We compare the performance of FIEs without additional alternative assets versus the portfolio with alternative assets, adding a hedge fund index, an equity mutual funds index, a commodity index, an electric power index, a public utilities index, a gold index, and a real estate index. Several performance measures were used, considering Brazilian regulations and a rebalancing strategy. Our results showed that almost all alternative assets used in this study improved the performance of the Brazilian FIEs of PGBL and VGBL private pension plans, especially the public utilities index and the hedge fund index. Some even improved the portfolio tail risk.

Volatility Risk Premium (VRP) is a hedging strategy to S&P500 during crisis where main focus is to leverage on Volatility ETFs SVXY and VXX as a portfolio to hedge against any inherent risk in the capital markets.

Volatility Characteristic • Volatility is a measure of how much a security’s price fluctuates • Implied vs Realized • Term structure • A hedging tool • An uncorrelated asset class

VRP Importance • Behavioural bias of risk aversion • Structural buying of insurance by fund managers and pension funds • Future is inherently more uncertain than the near term  contango

Market risk premiums (MRP) measure the expected return on investment an investor looks to make. For potential investors looking to add to their portfolio, the perfect scenario for a risk-based investment would be a high rate of return with as small a risk as possible. There are three main concepts to MRP’s, including required market risk premiums, historical market risk premiums and expected market risk premiums. In 2025, average market risk premiums in Germany stood at *** percent. MRP in Europe As of 2025, Germany had one of the ****** average market risk premiums in Europe. At the same time, market risk premiums in Russia were more than ***** as high due to the risk of investment involved. Risk free rates Risk free rates are closely associated to market risk premiums and measure the rate of return on an investment with no risk. As there is no risk associated, the rate of return is lower than that of an MRP. Average risk free rates across Europe were relatively low in 2025. The risk free rate of investment in Germany was less than three percent as of 2025.

Sources:

German Central Bank (ed.), 1975: Deutsches Geld- und Bankwesen in Zahlen 1876 – 1975. (German monetary system and banking system in numbers 1876 – 1975) German Central Bank (ed.), different years: monthly reports of the German Central Bank, statistical part, interest rates German Central Bank (ed.), different years: Supplementary statistical booklets for the monthly reports of the German Central Bank 1959 – 1992, security statistics Reich Statistical Office (ed.), different years: Statistical yearbook of the German empire Statistical Office (ed.), 1985: Geld und Kredit. Index der Aktienkurse (Money and Credit. Index of share prices) – Lange Reihe; Fachserie 9, Reihe 2. Statistical Office (ed.), 1987: Entwicklung der Nahrungsmittelpreise von 1800 – 1880 in Deutschland. (Development of food prices in Germany 1800 – 1880) Statistical Office (ed.), 1987: Entwicklung der Verbraucherpreise (Development of consumer prices) seit 1881 in Deutschland. (Development of consumer prices since 1881 in Germany) Statistical Office (ed.), different years: Fachserie 17, Reihe 7, Preisindex für die Lebenshaltung (price index for costs of living) Donner, 1934: Kursbildung am Aktienmarkt; Grundlagen zur Konjunkturbeobachtung an den Effektenmärkten. (Prices on the stock market; groundwork for observation of economic cycles on the stock market) Homburger, 1905: Die Entwicklung des Zinsfusses in Deutschland von 1870 – 1903. (Development of the interest flow in Germany, 1870 – 1903) Voye, 1902: Über die Höhe der verschiedenen Zinsarten und ihre wechselseitige Abhängigkeit.(On the values of different types of interests and their interdependence).

We assume that domestic (foreign) agents, when investing abroad, can only trade in the foreign (domestic) risk-free rates. In a preference-free environment, we derive the exchange rate volatility and risk premia in any such incomplete spanning model, as well as a measure of exchange rate cyclicality. We find that incomplete spanning lowers the volatility of exchange rate, increases the risk premia but only by creating exchange rate predictability, and does not affect the exchange rate cyclicality.

Abstract (en): We assume that domestic (foreign) agents, when investing abroad, can only trade in the foreign (domestic) risk-free rates. In a preference-free environment, we derive the exchange rate volatility and risk premia in any such incomplete spanning model, as well as a measure of exchange rate cyclicality. We find that incomplete spanning lowers the volatility of exchange rate, increases the risk premia but only by creating exchange rate predictability, and does not affect the exchange rate cyclicality.

Correlation matrix results.

Renewable Energy Warranty Insurance Market Outlook

According to our latest research, the global renewable energy warranty insurance market size reached USD 5.92 billion in 2024, reflecting robust expansion in line with the accelerating deployment of renewable energy projects worldwide. The market is expected to grow at a CAGR of 10.7% from 2025 to 2033, reaching a projected value of USD 14.34 billion by 2033. This impressive growth is primarily driven by the surging demand for risk mitigation solutions in the renewable energy sector, as asset owners and investors seek to safeguard their investments against performance failures, defects, and operational uncertainties.

One of the primary growth factors propelling the renewable energy warranty insurance market is the rapid expansion of global renewable energy capacity. Governments and private sector players are investing heavily in solar, wind, hydropower, and bioenergy projects to meet ambitious decarbonization targets. As the scale and complexity of these projects increase, so does the exposure to technical and financial risks. Warranty insurance products, such as product warranty insurance and performance warranty insurance, have become essential in providing assurance to investors, lenders, and project developers. These insurance solutions help bridge the trust gap between technology providers and asset owners, enabling smoother project financing and reducing the risk premium associated with renewable infrastructure investments.

Another significant driver is the evolving regulatory landscape and the rising emphasis on long-term asset performance. Many governments are introducing policies that incentivize renewable energy adoption while simultaneously tightening quality and reliability standards. As a result, manufacturers, operators, and investors are increasingly turning to extended warranty insurance and performance guarantees to comply with these regulations and ensure the continued operation of their assets. Furthermore, as renewable energy technologies mature and project lifespans extend beyond two decades, the need for comprehensive insurance coverage that addresses unforeseen failures, degradation, and operational disruptions becomes even more critical. This trend is further amplified by the growing participation of institutional investors, who demand robust risk management frameworks as a prerequisite for funding large-scale renewable projects.

Technological innovation and the diversification of insurance offerings are also catalyzing market growth. Insurers and third-party administrators are leveraging advanced analytics, IoT-enabled monitoring, and predictive maintenance tools to design more tailored and responsive warranty products. These innovations not only enhance risk assessment and claims management but also enable dynamic pricing and coverage customization, making warranty insurance more accessible and attractive to a broader range of end-users. The increasing integration of digital platforms and automation in policy administration is streamlining the customer experience and reducing operational costs for insurers, further fueling market expansion. As the renewable energy ecosystem continues to evolve, the ability to offer flexible, data-driven insurance solutions is emerging as a key differentiator for market players.

As the renewable energy sector continues to expand, the need for specialized insurance products such as Renewable Energy Weather Risk Insurance becomes increasingly critical. This type of insurance is designed to protect renewable energy projects from the financial impacts of adverse weather conditions, which can significantly affect energy production and project revenues. By providing coverage against weather-related risks, this insurance helps stabilize cash flows and enhances the bankability of renewable projects. As climate change leads to more unpredictable weather patterns, the demand for weather risk insurance is expected to grow, offering a vital risk management tool for project developers and investors alike.

Regionally, Asia Pacific is poised to dominate the renewable energy warranty insurance market, driven by the rapid deployment of solar and wind projects in China, India, Japan, and Southeast Asia. North America and Europe are also significant contributors, benefiting from mature insurance markets and strong