Low volatility

Low volatility – or “low vol” – investing means buying shares (or bonds) that tend to go up or down in price by less than the overall market (in other words, they’re less volatile).

Low volatility or "low vol" investing means buying shares (or bonds) that tend to go up or down in price by less than the overall market (in other words, they're less volatile).

In theory, low-volatility assets should deliver lower returns than highly volatile ones, because investors are supposed to demand extra rewards for taking extra risks. Yet in fact, studies show that low-vol stocks beat their higher-volatility peers over time. As a result, low vol has been marketed as a "factor" alongside value, small-cap and momentum investing that can help investors to beat markets over the long run.

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