{"id":263404,"date":"2025-09-17T14:52:04","date_gmt":"2025-09-17T14:52:04","guid":{"rendered":"https:\/\/www.quoniam.com\/?p=263404"},"modified":"2025-09-18T10:51:53","modified_gmt":"2025-09-18T10:51:53","slug":"low-vol-equities","status":"publish","type":"post","link":"https:\/\/www.quoniam.com\/en\/article\/low-vol-equities\/","title":{"rendered":"Low volatility equities: A smarter choice for income-driven investors"},"content":{"rendered":"\n<div class=\"wp-block-group is-style-smallBG\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n<h5 class=\"wp-block-heading\"><strong>The problem with traditional choices<\/strong><\/h5>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Market cap weighted equities:<\/strong> While offering strong long-term returns, their higher volatility (15%) creates significant \u201csequence-of-returns risk.\u201d In payout phases, poor returns early on can dramatically increase the chance of ruin (running out of money before the horizon). The simulation in the table below shows that equities alone carry almost a 50% chance of ruin over 30 years.<\/li>\n\n\n\n<li><strong>Gilts (bonds): <\/strong>While less volatile, their lower return potential (5%) struggles to keep pace with inflation-adjusted payouts. The analysis shows gilts lead to an even higher probability of ruin, close to 95% over 30 years. Growth is insufficient to sustain the retirement income that is withdrawn.<\/li>\n<\/ul>\n\n\n\n<h5 class=\"wp-block-heading\">Why low volatility equities shine<\/h5>\n\n\n\n<p class=\"wp-block-paragraph\">The analysis assumes low volatility equities deliver the same average return (8%) as regular equities but with much lower volatility (11% vs. 15%). That reduction in downside fluctuations has a profound effect on outcomes:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The probability of ruin over 30 years drops meaningfully compared to both gilts and traditional equities.<\/li>\n\n\n\n<li>Median final wealth is substantially higher than either pure gilts or mixed portfolios, showing that investors not only avoid ruin but also preserve and grow wealth.<\/li>\n<\/ul>\n\n\n\n<h5 class=\"wp-block-heading\">The investor benefit<\/h5>\n\n\n\n<p class=\"wp-block-paragraph\">For an investor drawing a steady 5% annual income, low volatility equities strike the balance:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>They provide the growth needed to keep pace with inflation and withdrawals.<\/li>\n\n\n\n<li>They reduce the sequence-of-returns risk that devastates high-volatility portfolios.<\/li>\n\n\n\n<li>They avoid the \u201cslow erosion\u201d that gilts face when payouts steadily drain low-return capital.<\/li>\n<\/ul>\n<\/div><\/div>\n\n\n\n<div class=\"wp-block-group\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n<h5 class=\"wp-block-heading\">Probability of ruin across time horizons (lower is better)<\/h5>\n\n\n\n<figure class=\"wp-block-image size-full\"><img decoding=\"async\" src=\"https:\/\/www.quoniam.com\/wp-content\/uploads\/2025\/09\/2025-09_LowVol-EQ.svg\" alt=\"\" class=\"wp-image-263407\"\/><figcaption class=\"wp-element-caption\">*The median wealth refers to an investor that retired with \u00a3100,000 at retirement, and withdrew 5% annual income. Source: Quoniam Asset Management<\/figcaption><\/figure>\n<\/div><\/div>\n\n\n\n<div class=\"wp-block-group is-style-smallBG\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n<h5 class=\"wp-block-heading\">Key takeaway<\/h5>\n\n\n\n<p class=\"wp-block-paragraph\">Low volatility or minimum-risk equity strategies are not just about smoothing the ride. For income-dependent investors, they can be the difference between sustainable withdrawals with wealth preservation versus a very real risk of running out of money.<\/p>\n<\/div><\/div>\n\n\n\n<div class=\"wp-block-group alignfull\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n<h6 class=\"wp-block-heading has-text-align-center\"><br>YOU MIGHT ALSO BE INTERESTED IN THIS<\/h6>\n\n\n\n\n<div class=\"smallBGwhite qm-element\">\n    <div class=\"grid-container\">\n    \n        <div class=\"grid-x grid-margin-y grid-padding-x small-up-1 medium-up-3 \">\n                                                                        <div class=\"newsTeaserWrapper cell extLink\">\n                            <div class=\"newsTeaser extLinkTeaser\">\n                                <a class=\"link-overlay\" href=\"https:\/\/citywire.com\/selector\/news\/german-boutique-builds-global-version-of-top-1-european-equity-fund\/a2498047\" title=\"Quoniam builds global version of top-1% European equity fund\" target=\"_blank\"><\/a>\n                                <div class=\"image\">\n                                    <img decoding=\"async\" src=\"https:\/\/www.quoniam.com\/wp-content\/uploads\/2025\/07\/dialogwissen_citywire-448x220-c-default.jpg\" loading=\"lazy\" \/>\n                                <\/div>\n                                <div class=\"info\">\n                                    <div class=\"preHeader\">\n                                        <div class=\"cat\">\n                                            External media\n                                        <\/div>\n                                        <div class=\"date\">\n                                            September 2026\n                                        <\/div>\n                                    <\/div>\n                                    <div class=\"headline\">Quoniam builds global version of top-1% European equity fund<\/div>\n                                    <div class=\"introText\">\n                                                                                    \n                                                                            <\/div>\n                                <\/div>\n                            <\/div>\n                        <\/div>\n                    \n                                                                                    <div class=\"newsTeaserWrapper cell\">\n                                    <div class=\"newsTeaser \">\n                                        <a class=\"link-overlay\" href=\"https:\/\/www.quoniam.com\/en\/interview\/more-room-for-alpha-in-concentrated-global-equity-markets\/\" title=\"More room for alpha in concentrated global equity markets\"><\/a> \n                                        <div class=\"image\">\n                                            <img decoding=\"async\" src=\"https:\/\/www.quoniam.com\/wp-content\/uploads\/2026\/09\/D-W_interview_Flad-448x220-c-default.jpg\" loading=\"lazy\" \/>\n                                            <div class=\"play-button-overlay\"><\/div>\n                                        <\/div>\n                                        <div class=\"info\">\n                                            <div class=\"preHeader\">\n                                                <div class=\"cat\">\n                                                    Interview\n                                                    \n                                                <\/div>\n                                                <div class=\"date\">\n                                                    September 2026\n                                                <\/div>\n                                            <\/div>\n                                            <div class=\"headline\">More room for alpha in concentrated global equity markets<\/div>\n                                            <div class=\"introText\">\n                                                                                                    <p>Market concentration is not new. But it continues to constrain how traditional long-only managers turn stock ideas into active positions. Ralf Flad, Head of Equities Portfolio Management, explains how Quoniam\u2019s Global Active Extension creates more room for alpha while retaining broad market exposure.<\/p>\n \n                                                 \n                                            <\/div>\n                                        <\/div>\n                                    <\/div>\n                            <\/div>\n                                                                                    <div class=\"newsTeaserWrapper cell\">\n                                    <div class=\"newsTeaser \">\n                                        <a class=\"link-overlay\" href=\"https:\/\/www.quoniam.com\/en\/article\/small-cap-potentials\/\" title=\"Unlock the potential of the smaller companies universe\"><\/a> \n                                        <div class=\"image\">\n                                            <img decoding=\"async\" src=\"https:\/\/www.quoniam.com\/wp-content\/uploads\/2025\/06\/DW_SmallCap-448x220-c-default.jpg\" loading=\"lazy\" \/>\n                                            <div class=\"play-button-overlay\"><\/div>\n                                        <\/div>\n                                        <div class=\"info\">\n                                            <div class=\"preHeader\">\n                                                <div class=\"cat\">\n                                                    Article\n                                                    \n                                                <\/div>\n                                                <div class=\"date\">\n                                                    August 2026\n                                                <\/div>\n                                            <\/div>\n                                            <div class=\"headline\">Unlock the potential of the smaller companies universe<\/div>\n                                            <div class=\"introText\">\n                                                                                                    <p>After years of underperformance, valuations for European small caps remain relatively attractive compared to large caps and other regions. The sector lends itself to active investing, and even more so to active systematic investing. Quoniam\u2019s systematic investment approach offers distinct advantages in identifying and capitalising on opportunities in the small cap space.<\/p>\n \n                                                 \n                                            <\/div>\n                                        <\/div>\n                                    <\/div>\n                            <\/div>\n                                                \n            \n        <\/div>\n    <\/div>\n<\/div><\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>The problem with traditional choices Why low volatility equities shine The analysis assumes low volatility equities deliver the same average return (8%) as regular equities but with much lower volatility (11% vs. 15%). That reduction in downside fluctuations has a profound effect on outcomes: The investor benefit For an investor drawing a steady 5% annual [&hellip;]<\/p>\n","protected":false},"author":20,"featured_media":263405,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_seopress_robots_primary_cat":"none","_seopress_titles_title":"Low volatility equities: A smarter choice for income-driven investors","_seopress_titles_desc":"When investors reach the payout phase, one of the greatest challenges is balancing regular withdrawals with the risk of running out of money too soon. This is where low volatility (low vol) or minimum-risk equity strategies can play a vital role.","_seopress_robots_index":"","footnotes":""},"categories":[44,77],"tags":[91,9,41,11],"class_list":["post-263404","post","type-post","status-publish","format-standard","has-post-thumbnail","category-article","category-interview","tag-capital-markets","tag-equities","tag-factor-investing"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.quoniam.com\/en\/wp-json\/wp\/v2\/posts\/263404","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.quoniam.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.quoniam.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.quoniam.com\/en\/wp-json\/wp\/v2\/users\/20"}],"replies":[{"embeddable":true,"href":"https:\/\/www.quoniam.com\/en\/wp-json\/wp\/v2\/comments?post=263404"}],"version-history":[{"count":5,"href":"https:\/\/www.quoniam.com\/en\/wp-json\/wp\/v2\/posts\/263404\/revisions"}],"predecessor-version":[{"id":263439,"href":"https:\/\/www.quoniam.com\/en\/wp-json\/wp\/v2\/posts\/263404\/revisions\/263439"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.quoniam.com\/en\/wp-json\/wp\/v2\/media\/263405"}],"wp:attachment":[{"href":"https:\/\/www.quoniam.com\/en\/wp-json\/wp\/v2\/media?parent=263404"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.quoniam.com\/en\/wp-json\/wp\/v2\/categories?post=263404"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.quoniam.com\/en\/wp-json\/wp\/v2\/tags?post=263404"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}