Low volatility index funds are a common type of index funds. Many small partners do not know what the low volatility index means, and whether it is worth investing. Here is a brief explanation of what the low volatility index means, hoping to help you understand the low volatility index more easily.
When it comes to volatility, you will think of two types of volatility:
1. The rise and fall of the stock over a period of time
2. Standard deviation of daily rise and fall over a period of time
The standard deviation of daily rise and fall refers to the difference between the daily rise and fall of a stock. A small difference means that it is a "low volatility" variety. For example, if a stock does not rise or fall very much every day during a certain period of time, its volatility will be low. If the range of rise and fall is very small for a period of time, but suddenly rises sharply for a period of time, then there will be a huge gap between the range of rise and fall in a single day, and the volatility will increase.
Low volatility index refers to the selection of stocks with a small change in the standard deviation of daily rise and fall. Such stocks are usually less concerned by the market, relatively cheap stocks, and have a small amount of funds to buy and sell. Because of the low attention of the market, they are in a low volatility state.
The 500 low volatility index is to select 150 stocks with the lowest volatility of standard deviation of daily rise and fall from the constituent stocks of the CSI 500 index. The lower the volatility, the higher the weight of stocks in the index. That is to say, 500 low volatility investments are stocks that are not concerned by the market for the time being. This index will adjust its position every six months, and exclude the stocks with higher volatility and include new stocks with lower volatility. When a stock moves from low volatility to high volatility, it is often because the stock has received attention. The amount of short-term trading funds has increased. In other words, 500 low volatility means that every time you sell a stock with high volatility, you buy a stock with low volatility. This will lead to a certain excess return on our investment. Low volatility index is to buy stocks that are not concerned by the market for the time being. When the volatility is high and the price rises, you can get higher returns.
Index fund tracking 500 low volatility at present: the over-the-counter Jingshun CSI 500 industry is neutral and low volatility
