Overcrowding puts low volatility indexes under pressure

Inflows increasing correlations and reducing performance, say traders


The soaring popularity of low volatility indexes among investors may be hurting the strategy's performance, according to traders.

Smart beta strategies have grown in importance in recent years, particularly among institutional and retail investors, with low volatility indexes attracting significant attention due to their smaller drawdowns and better performance compared with industry benchmarks. But traders warn that overcrowding into the strategies may be raising correlations and reducing index

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact [email protected] or view our subscription options here: http://subscriptions.risk.net/subscribe

You are currently unable to copy this content. Please contact [email protected] to find out more.

To continue reading...

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here: