Our View

There’s an intuitive understanding of the relationship between risk and return—the prospect of higher returns is typically associated with higher levels of risk. This is sometimes referred to as the risk/return trade-off.  

Does this mean that investors with a lower risk appetite must fundamentally accept lower returns? We think the answer is no because, in fact, lower-volatility stocks have historically generated similar returns to the broad market. In this paper, we provide a few observations regarding why now may be an opportune time to start thinking about an allocation to lower-volatility stocks.

¹ Buffer ETFs use options to seek a targeted level of downside mitigation; the tradeoff is a limit on upside potential.

Important Risks: Investing involves risk, including the possible loss of principal. • Foreign investments may be more volatile and less liquid than U.S. investments and are subject to the risk of currency fluctuations and adverse political and economic developments. These risks may be greater for investments in emerging markets. • Fixed income security risks include credit, liquidity, call, duration, and interest-rate risk. • Diversification does not ensure a profit, protect against a loss, or eliminate market risk.

All information provided is for informational and educational purposes only and is not intended to provide investment, tax, accounting, or legal advice. As with all matters of an investment, tax, or legal nature, you and your clients should consult with a qualified tax or legal professional regarding your or your client’s specific legal or tax situation, as applicable. The preceding is not intended to be a recommendation or advice. Tax laws and regulations are complex and subject to change.

The views expressed here are those of the authors and should not be construed as investment advice. They are based on available information and are subject to change without notice. Portfolio positioning is at the discretion of the individual portfolio management teams; individual portfolio management teams, and different fund sub-advisers, may hold different views and may make different investment decisions for different clients or portfolios. This material and/or its contents are current as of the time of writing and may not be reproduced or distributed in whole or in part, for any purpose, without the express written consent of Hartford Funds.