Finance
Avoiding Volatility Is Even Harder Than It Looks in This Market
In an economy-wide crisis, defensive investments can get burned, too.
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For investors who aim to hold down the volatility of their investments, this has been a very unsettling year. Not only have markets been wild, but many classic havens proved not to be so safe in the face of the coronavirus pandemic.
Take one of the simplest examples: buying stocks that in the past have shown low volatility. The S&P 500 Low Volatility Index—which measures the 100 steadiest stocks in the S&P 500—has lost more than 16% so far this year, compared with a loss of about 7% for the broader gauge. The low-volatility companies were hit slightly harder during the equity rout from Feb. 19 to March 23 and have recovered less than the market since then.