Low volatility funds are one of those investing concepts that seems too good to be true. Not only are you likely to earn as good, or even better return, but you can do it with a lower level of risk. Naturally, I was a little skeptical.
That is why I am somewhat impressed with the performance of the majority of the low volatility funds this year. With all the volatility experienced, they did exactly what they were supposed to do, and helped protect investors’ capital. During the September 1 to October 15 period, the MSCI World Index dropped by nearly 7%, yet this fund was off by 6.1%.
Perhaps even more impressive, to the end of November, it has gained 19.4%, outpacing the 15.2% rise in the benchmark. While these results are indeed encouraging, I am still reluctant to recommend it until there is at least a three year audited track record.