How equities can be a low-risk option

Susanne Willumsen, senior portfolio manager on Lazard's global quantitative equity team, explains how low volatility equities can form part of a credible investment solution.

The principle of risk/return has been so long established in investment management theory and practice that it is rare for the accepted wisdom on portfolio construction to be questioned. However, it is our view that equity investors can achieve superior capital returns with lower than market absolute risk with a carefully constructed and fully diversified portfolio of low volatility stocks. Equities and low risk are rarely mentioned in the same sentence. When they are, it is typically in the context of ‘de-risking’ to passive management – a different concept of risk entirely. To be ...