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Low volatity investment

low volatity investment

This investment style is also referred to as minimum volatility , minimum variance , managed volatility, smart beta, defensive and conservative investing. Income generator A bank decided to include Conservative equities in its defensive income model portfolio, as the strategy combines high dividend yield with lower downside risk. In a very bullish environment, the strategy could lag the overall market, while still delivering solid absolute returns.

Types of low-volatility investments

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Factor investing: The paradox of low volatility

low volatity investment
In times of uncertainty, investors who want low risk along with capital preservation may turn to low-volatility investments. Securities considered to be low-volatility do not fluctuate in value as much as other investments. As a result, these investments may sometimes underperform in a rising market. But in theory they should be less volatile on the downside. A low-volatility investing strategy focuses on reducing volatility or risk compared to the stock market index, says Jeet Dhillon, vice-president and senior portfolio manager at TD Wealth Private Investment Counsel. Many people think of cash, GICs and bonds when they think of low-volatility investments, but stocks and ETFs can also fall into this category. Dhillon adds that utilities and consumer staples are examples of low-risk stocks because the demand for the goods and services from these companies is less cyclical.

Risks of low-volatility investments

In reality, management fees and other costs are charged. Namespaces Article Talk. Taxation: How to soften the tax bite. That could also be the case for low-volatility investing, and some point to the high valuations of low-volatility stocks in the late s. In reality, management fees and transaction and other costs are charged.

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