However, recent research suggest that low volatility portfolios outperform higher volatility portfolios over the long term, reports Jackie Noblett for Ignites. Furthermore, S&P summarized the existing research and tested its own strategies. Results indicated that low-volatility strategies had better risk-adjusted returns over 10, 15, and 20-year periods, but performance was mixed over shorter time horizons.
The VIX volatility index reflected that overall stock market volatility was three times higher post 2008 credit crisis and after the 2011 U.S. credit rating downgrade.
The latest low-volatility ETFs to launch:
- PowerShares S&P MidCap Low Volatility Portfolio
- PowerShares S&P SmallCap Low Volatility Portfolio
- SPDR Russell 1000 Low Volatility ETF
- SPDR Russell 2000 Low Volatility ETF
PowerShares S&P 500 Low Volatility ETF
Tisha Guerrero contributed to this article.