Making money in a low-volatility environment is tough.
Luckily, Goldman Sachs recognizes all of this and has a few ideas to help traders navigate these stagnant times.
First and foremost, investors should be looking to buy stocks. The S&P 500 in particular has seen large risk-adjusted returns relative to other asset classes in low-volatility periods since 1990, according to Goldman data.
Looking beyond the level of returns, Goldman also finds that stocks see the biggest improvement in risk-adjusted performance relative to history when price swings are muted. By this measure, non-US equities are actually the biggest winners, specifically emerging-market, European and Japanese stocks.
Goldman also recommends buying high-yield bonds, but notes that their outperformance relative to other asset classes isn't unique to low-volatility periods.
Source: Bloomberg
Junior Trader Stefan Panteleev
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