Equity strategy designed to deliver a smoother pattern of returns
Guggenheim’s Minimum Volatility strategy seeks to achieve a smoother pattern of returns that, over time, are similar to or slightly better than traditional equity benchmarks. Our portfolios are constructed to benefit from empirical evidence that demonstrates the historical outperformance of low-volatility stocks, a market inefficiency known as the low volatility effect.
Nardin Baker, chief strategist for the Minimum Volatility strategy, created and implemented one of the first low volatility portfolios in 1988 and his 1991 research paper The Efficient Market Inefficiency of Capitalization-Weighted Portfolios is largely cited as proof of the low volatility effect. Nardin and Senior Portfolio Manager Ole Jakob Wold have been working together since 1994.
We maintain a data library with information on more than 30,000 global equities. Our sophisticated volatility models and optimization technology allow us to perform dynamic research and work closely with clients to solve their specific return and risk objectives. Our minimum volatility portfolios are customizable by region (including U.S., global and emerging markets) and are optimized in an investor’s domestic currency to reduce currency-related volatility.
Our portfolios consist of stocks with historically low volatility and characteristics that tend to position them for stable near-term growth. As a result, the strategy has historically underperformed during periods of excessive optimism in broader stock markets but significantly outperformed during market downturns. This combination of performance may help the strategy achieve its goal of outperforming capitalization-weighted indices over the long term.
Nardin Baker, CFA
Senior Portfolio Manager
Ole Jakob Wold
Senior Portfolio Manager
Risk Considerations: Past performance is not a guarantee of future results. Investing involves risk, including the possible loss of principal. There is no guarantee that any investment strategy will achieve its investment objectives or is suitable for all investors. Diversification does not ensure profit nor protect against loss. Every asset class is subject to various risks that affect their performance in different market cycles. Fixed income investments are subject to certain risks including market, interest-rate, issuer, credit, and inflation risk. Equity investments are subject to market risk or the risk of loss due to adverse company and industry news, or general economic decline. Alternative investments are subject to market risk, currency risk, foreign investment risks, liquidity risks, higher fees and expenses, regulatory restrictions, and volatility due to speculative trading and use of leverage.