Home Breadcrumb caret Economy Breadcrumb caret Economic Indicators Breadcrumb caret Investments Breadcrumb caret Market Insights Should clients avoid low-volatility stocks? Investors who’ve flocked to low-volatility stocks have pushed up valuations. By Staff | October 22, 2014 | Last updated on October 22, 2014 1 min read When global economies are on shaky ground, investors prefer low-volatility stocks. Currently, however, these securities aren’t attractively priced, says Michael Peterson, managing principal and portfolio manager for International, European and Global Value Strategies at Pzena Investment Management in New York. He manages the Renaissance Global Value Fund. This isn’t surprising, he adds, since clients started flocking to low-volatility stocks when prices dipped in 1999. As a result, valuations have risen and there are more attractive places to be. Read: How new investors can buy into an expensive market Convincing clients to make the switch won’t be easy, however, since investors are still worried about where global growth is headed, says Peterson. That’s because of the “events of 2008, and you can also look back to Europe in 2011.” As well, “we haven’t been in a robust economic growth period” since 2006. Further, if you look at the backward price charts of low-volatility stocks, you’ll see that they’ve had a strong run over the last seven years. Conversely, the higher-beta sector of the market “was a disastrous place to be in 2008 and 2011.” Read: 8 phrases for tough conversations So, you need to show clients that sector hasn’t “really recovered to the extent that you would normally expect” following a recession. That means valuations are still depressed and there are opportunities to uncover. Read: How to mitigate risk when value investing How to capture alpha Unwind an over concentrated portfolio How to take the market’s pulse Staff The staff of Advisor.ca have been covering news for financial advisors since 1998. Save Stroke 1 Print Group 8 Share LI logo