OLZ focuses exclusively on risks. What sounds like a boring investment approach is aimed at many more investors than just those who shy away from any kind of risk. The focus on volatility does not stem from our "risk aversion", but from the scientifically proven fact that investment risks can be predicted more reliably than investment returns. Our minimum risk strategy takes into account not only the volatility of individual stocks, but also their behaviour in relation to each other (correlation). If these two factors are combined in an optimization, the result is a portfolio that performs better in the long term than conventional, capital-weighted index solutions. In this context, "performing better" means two things: on the one hand, the portfolio risk is systematically reduced, and on the other hand, shares with low volatility deliver an additional return in the long term. Thanks to the lower portfolio risk, a higher equity allocation can be held for the same level of risk, which leads to a higher equity premium.
Systematic reduction of portfolio risk
The volatility of our OLZ Equity World ex CH Optimized ESG strategy is on average almost 30% lower than the volatility of the index (see Figure 1). The reduction in risk can be observed over time, independent of the market environment. Moreover, partial hedging of foreign currency risks further increases the extent of risk reduction.