Vendors work the floor at the NYSE in New York.
Brendan McDermid | Reuters
A dovish tilt from the Federal Reserve sent the total from stocks to bonds to gold rallying in unison, but stocks with this one feature are poised to crush the make available after a rate cut, according to Goldman Sachs.
And that feature is low volatility. With muted price swings, low-volatility commonplaces tend to perform like bond proxies such as utilities and high-dividend payers. They have historically outperformed during the 12 months ape the beginning of the Fed’s rate cut cycles, according to Goldman’s chief U.S. equity David Kostin.
“Low volatility stocks have outperformed significantly since the start of May as productive uncertainty and the odds of a Fed rate cut rose. In addition to monetary policy, intensifying trade rhetoric, slowing economic success, and rising geopolitical tensions have dominated investor attention in recent weeks,” Kostin said in a note Friday.
Because these placid reservoirs are also classic defensive plays, investors have been flocking to the group amid the intensifying trade war and forebodings of an economic slowdown. Two largest low-volatility exchange-traded funds —