Coping with market volatility has become a pressing need for US equity managers since the start of the financial crisis, but which companies have proved themselves capable of riding out the storm?
Most managers argue that investment time horizons make most daily market moves nothing more than short-term noise. But even on a decade long view, there are just seven stocks in the S&P 500 that have a high/low spread of less than 100% of their market value.
The research from Bespoke Investment Group encompasses the period from February 2002 to February 2012, incorporating much of the so-called ‘lost decade' for stocks. But for investors looking for dependability, the go-nowhere nature of these shares may seem more like a virtue, particularly when dividends are taken into account.
Among the least volatile stocks are a number of names known for their reliable income streams: Investors in Coca-Cola and Johnson & Johnson, for example, have enjoyed 49 consecutive years of dividend increases from either company.
Such consumer staples have been a feature of developed market portfolios of late, finding favour with managers looking for dependable defensives as the West struggles to reinvigorate growth rates.
The study suggests they may be on to something: 11 of the 17 least volatile stocks reside in the consumer staples sector, including familiar names such as Heinz, Kraft and Colgate-Palmolive. The only financials firm in the top 40, by contrast, is Warren Buffett's Berkshire Hathaway.
Least volatile S&P 500 stocks, February 2002 - February 2012
|Stock||Sector||10-year high/low spread %|
|Johnson & Johnson||Healthcare||80.77|
|HJ Heinz||Consumer Staples||106.24|
|Kraft Foods||Consumer Staples||111.2|
|Campbell Soup||Consumer Staples||117.05|
|General Mills||Consumer Staples||119.00|
|ConAgra Foods||Consumer Staples||123.67|
|Automatic Data Processing||Technology||133.34|
|Pinnacle West Capital||Utilities||138.11|
|Illinois Took Works||Industrials||144.15|
|Genuine Parts||Consumer Discretionary||160.18|
|Procter & Gamble||Consumer Staples||170.78|
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