Dear reader,
A question you may be asking yourself: how do I find the future winners in the stock market? In the news, we mostly see the big winners, growth stocks like Nvidia, ASML, Tesla and Amazon popping up. But what actually works better in the long run? Looking for the future winner and taking more risk, or settling for stable returns and less risk?
Research shows that taking less risk in the stock market yields higher returns in the long run. This phenomenon is known as the 'low-volatility anomaly'. Many fund managers often take more risk to earn their bonus in the short term by beating their peers and benchmarks. This explains why low-volatility stocks are often underexposed, when it is precisely these stocks that can deliver more stable and higher returns over the long term.
At Summetric Capital, we strive for long-term value creation by focusing on this principle, among others.
Please refer to the following article where this is astutely summarised:
Sincerely,
Team Summetric Capital
