Quant Safety Trade Under Fire Just as Stock Volatility Hits
- Low-vol stocks trade at rich premiums as defensive bets boom
- Quants and human traders dig deeper in search for quality
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As the cross-asset calm snaps, one breed of investor is paying through the nose for stocks that hedge doomsday.
Dubbed low-volatility investing, the style beloved by quants has ridden a wave of inflows for 10 straight months as demand for safety booms. That has sent premiums for U.S. companies soaring, just as fears grow that the cohort suffers from overexposure to sector bets like bond proxies.