Chee Ooi, Senior Portfolio Manager with the Active Quantitative Equity team at State Street Global Advisors, discusses the team’s unique approach to constructing defensive equity portfolios and corrects common misperceptions about what a well-formulated defensive equity strategy can accomplish – not just in periods of market volatility, but also in periods of relative calm.
Adding Alpha to Minimum-Volatility Equity Strategies
Recent research exploring the boundaries of performance improvement for minimum-volatility strategies suggests that, for investors primarily focused on risk-adjusted returns, defensive strategies with a dual risk and return mandate may be the better choice.
Don’t Overpay to Be Defensive
When defensive equity positions become more appealing, stocks that exhibit lower-risk attributes, including low beta stocks and stocks in traditionally defensive sectors, can become expensive.
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