Before deciding whether a yield is attractive, it helps to know what you can earn without taking much additional risk.

For dollar investors, short-term U.S. Treasury bills are a useful baseline.

They are not the answer to every investment question.

They are the starting point for comparing the return on dollars.

Why the benchmark matters

Suppose a strategy offers a 10% yield.

The number sounds attractive on its own.

It becomes more useful once you ask what you could earn elsewhere and what additional risk you are taking to earn the difference.

If short-term Treasury bills offer a lower return, the gap between the two numbers is not simply “extra yield.”

It is compensation for something.

That something could be credit risk, leverage, illiquidity, complexity, market exposure, or some combination.

Yield is not risk-free

A higher yield does not automatically mean a better investment.

A yield can be high because an opportunity is genuinely attractive.

It can also be high because the market is asking you to take a risk that other investors would rather avoid.

The useful question is:

What am I being paid to take on?

That question is more informative than asking whether a number looks high.

A simple comparison

Imagine:

• Treasury bills: 4%

• Strategy A: 6%

• Strategy B: 12%

Strategy A is earning an additional 2 percentage points.

Strategy B is earning an additional 8.

That does not tell you which one is better.

You still need to understand the source of each return.

For Strategy A, perhaps the incremental return comes from moderate credit exposure.

For Strategy B, perhaps it comes from leverage, illiquidity, complex trading, or a combination of risks.

The benchmark gives you the starting point.

The rest is due diligence.

The benchmark can change

Treasury yields move with interest rates and market conditions.

That means the appropriate baseline changes over time.

A 5% yield means something different when T-bills yield 5% than when they yield 1%.

This is another reason headline APY comparisons can be misleading.

The opportunity cost of holding dollars changes.

Why this matters for Radial

Radial’s starting point is the dollar.

That makes the Treasury-bill benchmark especially useful.

Some Radial strategies may offer returns above a Treasury baseline, but the incremental return should always be understood in terms of the risk and complexity required to produce it.

The point is not to eliminate risk.

It is to understand what you are being paid to take.