Disclosure – Non-substantive Research
This is not substantive investment research or a research recommendation, as it does not constitute substantive research or analysis. With this commentary, Kepler Partners LLP does not intend to influence your investment firm's behaviour.
It is fair to say the last 18 months have been a wild ride for markets – and life has been pretty volatile outside of them too. It is notable how the volatility of indices as well as individual trusts’ NAVs and share prices have been higher over the past 18 months than they were before. As we discussed in a recent strategy note, the best performer through the pandemic period was the mighty Scottish Mortgage (SMT), despite at least one significant drawdown during the period and the highest NAV volatility in its sector. This leads us to ponder whether there is a lesson in this. Should investors look for managers and trusts that can keep volatility low, or should they focus exclusively on returns and accept volatility as a consequence? Our analysts examine the case for and against keeping volatility low.
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