Which type of assets are associated with low reliability rates of return due to infrequent pricing?

Illiquid assets are characterized by infrequent pricing, which often leads to low reliability rates of return. This occurs because illiquid assets cannot be quickly or easily sold in the market without causing a significant price impact. Consequently, the pricing data for these assets can be sparse and not reflective of their true market value, which complicates return estimation.

Investors often rely on the past performance of similar assets or subjective valuations in the absence of recent market prices. This results in a higher degree of uncertainty regarding the expected returns of illiquid assets, making them less reliable for forecasting future performance compared to assets that trade frequently in liquid markets.

In contrast, liquid assets are traded often, allowing for timely and accurate pricing information, while short-term assets typically include instruments that are expected to mature quickly and trade actively, providing more reliable return metrics. Highly volatile assets, while having unpredictable pricing due to their price swings, do not necessarily indicate low reliability of return as their market activity can still be frequent.