• Low Volatility, Attention & Asset Growth
  • The Facts Regarding Excess Returns
  • Low Volatility’s Four Flagship Factors
  • Did Volatility Break Value
  • Downside Redemption
  • Considerations for Timing
  • Low-Volatility & Ranked Securities

Low Volatility, Attention & Asset Growth

Infused with the vicissitudes of quarreling politicians, growing mountains of debt and stagnant economies in much of the developed world, investors have been faced with a virtual bull market in “worry” and, oddly, an actual bull market in U.S. equities over the last couple of years. Kiplinger’s magazine, citing data from TrimTabs, recently noted that in the first half of 2012 stock mutual funds and ETFs saw net inflows of only $6 billion.2 As the sharp pains from the severe drawdowns experienced in 2008 collide with the growing sense of missing out on the inexorable advance of U.S. shares, people have flocked to products that promise much of the upside with far less of the downside. Chief among the beneficiaries of the newfound obsession with geometric returns appears to be “low-volatility” products which have begun showing up in force across the investment universe.

Kailash Concepts has watched with growing interest as numerous thoughtful articles have appeared in publications such as Barron’s, The Wall Street Journal and Institutional Investor. While the approaches vary, ultimately all these articles grapple with a relatively old and well-researched concept that higher returns are not always associated with higher risk, as well as the tendency for low-volatility strategies to outperform in negative market environments. Academics have been analyzing the risk/return issue for decades as it seems to conflict with the concept of market efficiency, but investor interest is a relatively new phenomenon. Looking just at ETFs, we can see the category has gone from non-existent to a multi-billion dollar product suite in just over one year, and by no means do ETFs capture all the various conduits by which investors can tap into this concept.

Disclaimer

The information, data, analyses, and opinions presented herein (a) do not constitute investment advice, (b) are provided solely for informational purposes and therefore are not, individually or collectively, an offer to buy or sell a security, (c) are not warranted to be correct, complete or accurate, and (d) are subject to change without notice. Kailash Capital, LLC and its affiliates (collectively, “Kailash Capital”) shall not be responsible for any trading decisions, damages or other losses resulting from, or related to, the information, data, analyses or opinions or their use. The information herein may not be reproduced or retransmitted in any manner without the prior written consent of Kailash Capital. In preparing the information, data, analyses, and opinions presented herein, Kailash Capital has obtained data, statistics, and information from sources it believes to be reliable. Kailash Capital, however, does not perform an audit or seeks independent verification of any of the data, statistics, and information it receives. Kailash Capital and its affiliates do not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only and is not intended to provide, and should not be relied on for tax, legal, or accounting advice. You should consult your tax, legal, and accounting advisors before engaging in any transaction. © 2021 Kailash Capital, LLC – All rights reserved.

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