Friday, January 25, 2013

The Low Volatility Anomaly

By Zach Kouwe Investors these days are searching for some way to protect their assets while still participating when the stock market gains steam. Bonds are yielding nothing and people are still fearful of market declines. The common theme throughout history has been that more risk equals more reward. But study after study has actually shown that low beta stocks (those that have less volatility and are hence less risky) actually outperform over time. Some have tried to explain why the anomaly exists. Old Mutual Asset Management (a client of the PR firm I work for) is out with a new white paper describing how low volatility strategies can be applied to 401k retirement account and target date funds.

Target Date Solutions and Low Volatility Strategies by Zach Kouwe