This is a phenomenon that cannot be explained by standard theories. In the case of investing, these are often divergences from the CAPM*, which assumes that investors are rational and that there is a linear correlation between risk and return.
The theory of 'behavioral finance' has since questioned the hypothesis of investor rationality. One well-known anomaly is the low-volatility (low-vol) anomaly. Based on the CAPM*-based theory, low-volatility equities can be expected to realize lower returns than high-volatility equities, since rational investors will only want to run more risk if they are rewarded for this in the form of extra returns. In practice, however, it can be seen that risk and return are less strongly correlated than is often thought.
The value of your investment may fluctuate. Results obtained in the past are no guarantee for the future.
* CAPM = Capital Asset Pricing Model
This page is intended for US prospects, clients and investors only and includes information about the capabilities, staffing and history of RIAM US and its participating affiliates, which may include information on strategies not yet available in the US. SEC regulations are applicable only to clients, prospects and investors of RIAM US. Robeco BV, Robeco HK and Robeco SH are considered a “participating affiliate” of RIAM US and some of their employees are “associated persons” of RIAM US as per relevant SEC no-action guidance. Employees identified as associated persons of RIAM US perform activities directly or indirectly related to the investment advisory services provided by RIAM US. In those situations, these individuals are deemed to be acting on behalf of IUAM, a US SEC registered investment adviser.By clicking I agree, I confirm that I have read and understood the above.