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Overcrowding puts low volatility indexes under pressure

The increased popularity of low volatility indexes may be to blame for a rise in correlations that has affected performance, say traders

Overcrowding

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

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