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Favored Quant Trade Was Hit In The Last Bout Of Market Volatility: (USMV) - (SPLV)

TedTed
edited February 2018 in Fund Discussions
FYI: As investors sift through the rubble from last week’s equity rout, a blemish has appeared on what had been one of the hottest trades among quantitative investors -- low volatility.

The approach ostensibly offered protection from equity gyrations by betting on stocks that have historically swung less than the overall market. But when the S&P 500 Index registered its worst week in two years, exchange-traded funds geared to low volatility sold off nearly as forcefully.
Regards,
Ted
https://www.bloomberg.com/news/articles/2018-02-14/favored-quant-trade-blemished-in-last-bout-of-market-volatility?srnd=etfcenter

Comments

  • JoJo26
    Everyone's misperception is that low vol funds will outperform in ANY high vol situation. The rout last week was a short-term vol spike (yes vol has ticked up and likely won't get back to the lows it was before, but it was still only short-term). This is just another example of the short-termism of many investors.
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