When less risk equals more return

It’s always gratifying when a topic you have been writing about starts getting wider coverage. I have been writing about the ‘low volatility anomaly‘ for awhile now and devote a section in Abnormal Returns: Winning Strategies from the Frontlines of the Investment Blogosphere book to the topic.  Below is a video of Christine Benz and Shannon Zimmerman at Morningstar talking about some research results showing mutual funds with lower risk outperforming higher risk funds.

More importantly they note the fact that investors who invest in low volatility funds have a tendency to perform better because they are less likely to get shook out of their positions at the worst possible time. One quibble is whether it is worth the time and effort for investors to look at actively managed low volatility mutual funds when there are passive alternatives. That issue aside, he video is a nice primer on low volatility investing and is worth a quick watch.

Source: Morningstar.com

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