We generally see better performance when volatility is low. Low volatility indices like the S&P 500® Low Volatility Index tend to perform better than the broader indices because they don’t include highly volatile stocks. While the S&P 500® Index is likely to perform better when the markets are good and stocks are generally rising, the low volatility indices have the potential to outperform broader indices over market cycles.
In addition to underlying investments in low volatility ETFs, Securian Asset Management adds a hedging overlay in the Managed Volatility Equity strategy, seeking to further reduce volatility.
Growth of $100
Source: S&P 500® Index Prices - Bloomberg, Securian Asset management from 6/24/1991 to 12/3/2018.
The low volatility indices not only had higher average annual returns than the broader S&P 500® Index, they also experienced lower overall market volatility.
| Average Annual Return | Volatility* | |
|---|---|---|
| S&P 500® Index | 9.34% | 17.66% |
| S&P BMI International Developed Low Volatility Index (SPIDLVUT) | 9.44% | 10.89% |
| S&P 500 Low Volatility Index (SP5LVIT) | 10.57% | 13.01% |
Source: S&P 500® Index Prices - Bloomberg, Securian Asset Management. From 6/24/1991 to 12/30/2018.
*As measured by the standard deviation of the indices.
The Securian Asset Management Managed Volatility Equity Strategy invests in low volatility ETFs which invest in low volatility indices and seeks further lower market volatility by using hedging techniques that target overall volatility of 10% or lower over time.
The S&P 500® Index consists of 500 large cap common stocks which together represent approximately 80% of the total U.S. stock market. It is a float-adjusted market-weighted index (stock price times float-adjusted shares outstanding), with each stock affecting the index in proportion to its market value.
The S&P 500® Low Volatility Index measures performance of the 100 least volatile stocks in the S&P 500®.
The S&P BMI International Developed Low Volatility Index measures the performance of the 200 least volatile stocks in the S&P Developed Market large-midcap universe. Constituents are weighted relative to the inverse of their corresponding volatility, with the least volatile stocks receiving the highest weights.
One cannot directly invest in an index.
Nothing contained herein constitutes investment, legal, tax or other advice nor is it to be relied on in making an nvestment or decision. This document should not be viewed as a current or past recommendation or a solicitation of an offer to buy or sell any securities or to adopt any investment strategy. Investing involves many inherent risks, including the potential loss of the entire investment. Opinions expressed herein are those of Securian Asset Management only, and only as of the date indicated.
Past performance is no guarantee of future results.
Effective May 1, 2018, Advantus Capital Management, Inc., changed its names to Securian Asset Management, Inc.
Securian Asset Management, Inc., is a subsidiary of Securian Financial Group, Inc.
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