What is minimum volatility investing?
Imagine that you’re a hiker who has two potential paths to climb a mountain. One trail is very challenging. It’s steep, rocky, and has several parts where the path has sharp descents. While the trail is exhilarating, there is also the increased risk of injury or falling. Alternatively, there is a second trail that is more gradual and stable. While this trail may be less exciting, there is a much lower chance of getting injured or hurt.
In this analogy, a minimum volatility strategy would look more like the second trail — less risky and designed to be more stable. A min vol portfolio can help investors navigate the risks of big fluctuations in the market. Just as hikers can still reach the summit of the mountain on a less…
