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Volatility & Risk · 08.18.22

How to Navigate the New Norm of Volatility and Perform

As the nature of volatility evolves, investors struggle with the old ways of reducing portfolio risk. Low volatility equity strategies may help.
  • Factor Investing
  • Volatility & Risk
  • Risk management
Format
Key points
What this is
As the nature of volatility evolves, investors struggle with the old ways of reducing portfolio risk. Low volatility equity strategies may help.
Why it matters
The higher frequency of one‑day volatility spikes has emerged as the norm in equity markets, creating a challenging market for investors to navigate.
Where it’s going
Well‑designed low volatility equity strategies, suited for today’s volatility, provide an opportunity to outperform.
Main Point

When Volatility Strikes, Add . . . Equities?

When volatility strikes, investors understandably may boost their bond allocation to arm their portfolios for more risk to come. But they have another choice: Add to the equity allocation with a low volatility equity strategy. A portfolio core of a well-designed low volatility equity strategy — taking advantage of the asymmetrical up-down patterns of the market — may reduce portfolio risk while enhancing performance.

Volatility & Risk

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