The strange anomaly of low-risk stocks

If you buy high-risk shares, you would be forgiven for expecting a higher return over the long term than if you'd bought safer stocks. But you'd be wrong, says Tim Bennett. Here's why.

It may not seem it, but these are actually fairly dull times in the stockmarket. Volatility, as measured by the Chicago Board Options Exchange (CBOE) Vix index, has been low for most of this year. When you compare 2012's stockmarket action to the swings and lurches seen since 2008, you can see why.

Stocks have traded in a much tighter range than in any other post-financial-crisis year so far. It may not be very exciting, but as Tadas Viskanta, founder and editor of Abnormalreturns.com notes, you can profit from this low volatility. But to do so, you have to leave behind one of investing's golden rules.

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Tim graduated with a history degree from Cambridge University in 1989 and, after a year of travelling, joined the financial services firm Ernst and Young in 1990, qualifying as a chartered accountant in 1994.

He then moved into financial markets training, designing and running a variety of courses at graduate level and beyond for a range of organisations including the Securities and Investment Institute and UBS. He joined MoneyWeek in 2007.