A low-variance portfolio—where the returns over a long period of time do not move too much away from the expected mean—is critical for goals such as retirement where we project long-term corpus requirements.
Averages often do not convey the full picture on several aspects, more so in the case of investments. Thus, the journey in delivering an average return of, say, 12 per cent over 10 years, has several periods when returns significantly deviate from the expected mean, both on the upside and downside. This variance indicates portfolio volatility.
Heightened risk-taking brings variance to the fore
Investor exuberance: Pre-Covid, investors typically had allocations to equity, debt, hybrid and gold funds so as to ensure a balanced portfolio. In the past few years, investor portfolios have gone heavily (almost entirely) in favour of equities with huge weightages to mid and small caps. This has skewed the risk-reward equation.
This story is from the December 08, 2024 edition of THE WEEK India.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the December 08, 2024 edition of THE WEEK India.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Sign In
What Will It Take To Clean Up Delhi Air?
IT IS ASKED, year after year, why Delhi’s air remains unbreathable despite several interventions to reduce pollution.
Trump and the crisis of liberalism
Although Donald Trump's election to a non-consecutive second term to the US presidency is not unprecedented—Grover Cleveland had done it in 1893—it is nevertheless a watershed moment.
Men eye the woman's purse
A couple of months ago, I chanced upon a young 20-something man at my gym walking out with a women’s sling bag.
When trees hold hands
A filmmaker explores the human-nature connect through the living root bridges
Ms Gee & Gen Z
The vibrant Anuja Chauhan and her daughter Nayantara on the generational gap in romance writing
Vikram Seth-a suitable man
Our golden boy of literature was the star attraction at the recent Shillong Literary Festival in mysterious Meghalaya.
Superman bites the dust
When my granddaughter Kim was about three, I often took her to play in a nearby park.
OLD MAN AND THE SEA
Meet G. Govinda Menon, the 102-year-old engineer who had a key role in surveying the Vizhinjam coast in the 1940s, assessing its potential for an international port
Managing volatility: smarter equity choices in uncertain markets
THE INDIAN STOCK MARKET has delivered a strong 11 per cent CAGR over the past decade, with positive returns for eight straight years.
Investing in actively managed low-volatility portfolios keeps risks at bay
AFTER A ROARING bull market over the past year, equity markets in the recent months have gone into a correction mode as FIIs go on a selling spree. Volatility has risen and investment returns are hurt.
