Is low vol crowded? That depends who you ask
Equity drawdowns have pushed more investors into low volatility strategies, raising fears of a build-up of risk
As market turbulence caused investors to flock to safety last year, low volatility investing provided them with at least some of the protection they were looking for.
The factor investing strategy – which in its most naive form buys the least volatile stocks over time – dropped 5% in 2022 compared with the S&P 500, which fell more than three times as far.
The low vol factor works on the premise
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