Tortoise investing, by the numbers

TDAM's low-volatility strategy screens for slow and steady earnings.

Michael Ryval 26 February, 2015 | 6:00PM

The concept of low-volatility investing had long appealed to Jean Masson, but it was a 1991 research paper by Robert Haugen, and a meeting with him at St. Louis's Washington University, that clinched it for Masson, a former professor of finance and now Montreal-based managing director at TD Asset Management Inc.

"You can see that a minimum-volatility portfolio has slightly higher returns than a cap-weighted index and only 75% of the volatility," says Masson, referring to  The Efficient Market Inefficiency of Capitalization-Weighted Stock Portfolios, by Robert Haugen and Nardin Baker, published in the Journal of Portfolio Management.

"The goal of the paper was not to promote low-volatility investing. It was to test the capital-asset pricing model (CAPM)," says Masson, who earned his PhD in finance at the University of Rochester in 1988. Put simply, CAPM is based on the notion that high-beta stocks should have higher expected returns than low-beta stocks.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
BCE Inc62.52 CAD-0.60
Lockheed Martin Corp400.90 USD0.13
McDonald's Corp210.10 USD-0.94
Metro Inc54.04 CAD-0.52
TC Energy Corp74.35 CAD0.07

About Author

Michael Ryval

Michael Ryval