Incorporating low volatility equity into a strategic allocation

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Executive summary

Low volatility equity strategies aim to provide market-like returns with significantly lower risk. They look to accomplish this by offering downside protection and meaningful upside participation. Given their defensive nature, investors want to know whether low volatility strategies belong in a strategic asset allocation and how this allocation should be funded. In this paper, we discuss how a strategic allocation to low volatility may help an investor achieve various outcomes, and how that allocation fits into a broader portfolio.