The low risk anomaly is one of the most fascinating paradoxes of all time as it defeats classic investment theories. Low risk stocks historically beat high risk ones going back well over eighty years over 18 times their returns.
Numerous academic studies suggest that harvesting well-rewarded factor premiums, like value, low volatility, quality or momentum enhances returns in the long run. The one that has received most attention in recent years is the low volatility factor.
In recent years, low volatility has become a new investment style offering lower-risk, without reducing return.
The low risk anomaly is one of the most fascinating paradoxes of all time as it defeats classic investment theories. Low risk stocks historically beat high risk ones going back well over eighty years over 18 times their returns.
Equity investors have a choice between active low volatility managers and low volatility index ETFs. Index strategies offer a transparent and often cheaper alternative to active low volatility investing, but in our view this comes with several drawbacks.
Capture the equity premium in emerging markets with potentially lower downside risk.
Aiming to achieve global developed equity returns at an expected lower level of downside risk.
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