MANY small investors do not like risk, so it is little wonder financial institutions are promoting new products that promise growth but without the uncertainty of shares. However, some of these new investments - with-profits bonds from life insurance companies, guaranteed equity funds from banks, life insurance companies and others - are less guaranteed than traditional low-risk investments. So is there a way of approaching the higher annual returns the stock market can offer without the risk? Guaranteed equity funds and with-profit bonds could be an answer, since they reduce risk while providing access to potential stock market growth. Additional lower-risk investments include offshore funds invested in international fixed-interest securitiesand managed currency funds. ''Managed currency funds are a fairly defensive instrument,'' said Clive Weedon, head of research at Noruma Research. ''Just make sure you get at least a dozen hard currencies under your fund.'' But ''lower-risk'' vehicles often come with drawbacks. ''There are always two sides to everything. It's true that a lot of these low-risk vehicles do not under-perform in any particular market, but at the same time, they never out-perform the market,'' Mr Weedon said. Investors should also know that both equity funds and with-profit bonds can tie up earnings for up to five years, with penalties for early redemption. Service charges for these investment routes are usually higher, too. If you are prepared to accept slightly higher risks, indicative of playing the stock market, the simplest and cheapest way to invest is through a low-cost, index-linked unit trust. In simple terms, an index-linked fund is a diversified stock portfolio which replicates (as closely as possible) the ups and downs of the stock market index. Barry Yates, a director at Vickers Ballas, said that with index-linked funds, the fund manager was no longer responsible for making investment decisions, he simply follows the index. Because ''following the index'' relieves the fund manager of a substantial amount of work, normal managing costs are often cut in half. ''Index-funds have caught on recently, and that's basically because smaller investors like the fact that most fund managers can't out-perform the market,'' Mr Weedon said. Historically, failure to beat the index is statistically more likely than success in producing larger-than-average gains. Diversification is vital as well. Academic studies show you need about 15 different shares to undercut the average level of risk inherent in the stock market. In other words, the fewer stocks you own, the greater the risk. For the middle-of-the-road investor, conservatively managed growth-and-income unit or investment trusts are ideal for the long term. When looking at unit and investment trusts choose only those which are large, diverse and prudently managed. Asked about the safety of these two vehicles, Mr Weedon said: ''The bigger the fund is, the less likely it will under-perform the median. And diversification is a must for those turned-off by risks. I would recommend a regional unit trust or even a worldunit trust.'' There is little risk of such investments falling significantly below the market average, and if they do produce higher returns, you can feel pleasantly surprised. And as you become more confident, potential growth becomes immeasurable. You can invest in progressively riskier types of shares and you can also ''gear up'' your returns. In most cases, shares in smaller companies have provided higher returns over the long term than shares in large companies. This is because, to remain competitive with long-standing, well-established companies, young companies must offer more attractive dividend payouts. And as there is a price for everything, investors must pay a little more for the insurance of a well-known name. Geared investments offer a different way to boost growth. They employ one of three ratchet mechanisms: borrowing, capital structure or use of futures and options. All these techniques boost gains on the chosen assets - but capital loss on a fall can comealmost as easily. Loss on the futures markets is intimidating for the small investor. But take note; the large profits which one can make from trading futures on margin often give rise to the common misconception that futures are inherently volatile and risky. But in reality, futures prices rise and fall in line with the movements in commodities. What gives rise to the risk is that if an investor has only to put up a 10th of the cash to buy futures instead of the real commodity, he can buy 10 times as much. This means that futures are volatile in proportion to the initial payment which is made, but not in proportion to the total ''real'' value of what the investor is buying. Even so, less experienced investors should proceed with caution, careful not to become disillusioned by the first futures salesperson who comes their way.