Not all low volatility strategies are created equal. The goal may be simple — smoother returns with less risk — but execution determines success. Portfolios built only on historical volatility can leave investors vulnerable. The key is in the design: constructing portfolios that capture resilience, avoid hidden risks, and deliver outcomes that last.
Too often, low volatility portfolios fall into traps that can undermine their effectiveness:
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Past ≠ Future: Historical volatility doesn’t ensure stability ahead.
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Stability without Strength: Some “low vol” companies appear defensive today but lack strong fundamentals that driver investor returns.
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Hidden Exposures: Portfolios built solely on past volatility can embed sector, regional, or macroeconomic risks.
What looks defensive on the surface may be vulnerable when markets shift.
Sector Biases: A Quiet Influence on Results
Many low volatility portfolios lean heavily into Utilities and Consumer Staples. While these sectors may seem stable, they are often interest-rate sensitive and underweight in growth areas like Technology — a bias that can cost investors when leadership rotates.
Resilience Isn’t Just About Avoiding Risk — It’s About Managing It Intelligently
NTAM’s Quality Low Volatility (QLV) strategy seeks to avoid sector biases to help ensure performance is driven by design, not default. By focusing on durability and persistence, QLV aligns with the true intent of low volatility investing: delivering stability while preserving upside potential.
Turn a Backward-Looking Screen Into a Forward-Looking Solution
Low volatility alone isn’t enough. By integrating quality fundamentals — strong balance sheets, durable profitability, and consistent cash flows — QLV helps ensure that defensive characteristics persist across market cycles.
This isn’t just about lowering risk. It’s about meeting investing objectives with confidence.
In Today’s Market, Resilience Is the New Alpha
How is your portfolio positioned for today’s turbulence? NTAM’s QLV strategy is designed for today’s complex environment — helping investors stay invested through turbulence while still capturing meaningful upside.
NTAM’s QLV Strategy Offers a Solution That Is Not Only Defensive, But Resilient
- Quality embedded to enhance persistence and resilience
- Sector neutrality to help eliminate sector concentrations
- Performance driven by design — not by default.
Is your portfolio ready to thrive?
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IMPORTANT INFORMATION
Northern Trust Asset Management (NTAM) is composed of Northern Trust Investments, Inc., Northern Trust Global Investments Limited, Northern Trust Fund Managers (Ireland) Limited, Northern Trust Global Investments Japan, K.K., NT Global Advisors, Inc., 50 South Capital Advisors, LLC, Northern Trust Asset Management Australia Pty Ltd, and investment personnel of The Northern Trust Company of Hong Kong Limited and The Northern Trust Company.
Issued in the United Kingdom by Northern Trust Global Investments Limited, issued in the European Economic Association (“EEA”) by Northern Trust Fund Managers (Ireland) Limited, issued in Australia by Northern Trust Asset Management (Australia) Limited (ACN 648 476 019) which holds an Australian Financial Services Licence (License Number: 529895) and is regulated by the Australian Securities and Investments Commission (ASIC), and issued in Hong Kong by The Northern Trust Company of Hong Kong Limited which is regulated by the Hong Kong Securities and Futures Commission.
For Asia-Pacific (APAC) and Europe, Middle East and Africa (EMEA) markets, this information is directed to institutional, professional and wholesale clients or investors only and should not be relied upon by retail clients or investors. This information may not be edited, altered, revised, paraphrased, or otherwise modified without the prior written permission of NTAM. The information is not intended for distribution or use by any person in any jurisdiction where such distribution would be contrary to local law or regulation. NTAM may have positions in and may effect transactions in the markets, contracts and related investments different than described in this information. This information is obtained from sources believed to be reliable, its accuracy and completeness are not guaranteed, and is subject to change. Information does not constitute a recommendation of any investment strategy, is not intended as investment advice and does not take into account all the circumstances of each investor.
This report is provided for informational purposes only and is not intended to be, and should not be construed as, an offer, solicitation or recommendation with respect to any transaction and should not be treated as legal advice, investment advice or tax advice. Recipients should not rely upon this information as a substitute for obtaining specific legal or tax advice from their own professional legal or tax advisors. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities. Indices and trademarks are the property of their respective owners. Information is subject to change based on market or other conditions.
All securities investing and trading activities risk the loss of capital. Each portfolio is subject to substantial risks including market risks, strategy risks, advisor risk, and risks with respect to its investment in other structures. There can be no assurance that any portfolio investment objectives will be achieved, or that any investment will achieve profits or avoid incurring substantial losses. No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment. Risk controls and models do not promise any level of performance or guarantee against loss of principal. Any discussion of risk management is intended to describe NTAM’s efforts to monitor and manage risk but does not imply low risk.
Past performance is not a guarantee of future results. Performance returns and the principal value of an investment will fluctuate. Performance returns contained herein are subject to revision by NTAM. Comparative indices shown are provided as an indication of the performance of a particular segment of the capital markets and/or alternative strategies in general. Index performance returns do not reflect any management fees, transaction costs or expenses. It is not possible to invest directly in any index. Net performance returns are reduced by investment management fees and other expenses relating to the management of the account. Gross performance returns contained herein include reinvestment of dividends and other earnings, transaction costs, and all fees and expenses other than investment management fees, unless indicated otherwise. For U.S. NTI prospects or clients, please refer to Part 2a of the Form ADV or consult an NTI representative for additional information on fees.
Forward-looking statements and assumptions are NTAM’s current estimates or expectations of future events or future results based upon proprietary research and should not be construed as an estimate or promise of results that a portfolio may achieve. Actual results could differ materially from the results indicated by this information.
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