Technical Analysis: Power Tools for Active Investors

The End Result: Less Is More

Chart 1.4 pretty much tells the story. With the exception of mutual funds in Group 1 (which includes many hybrid stock, bond funds), equity and balanced mutual funds of relatively low volatility produced essentially the same returns over the 1983–2003 decade as mutual funds of higher volatility. Generally, the highest average returns were secured with mutual funds of approximately average volatility, where the curve of returns appears to peak. However, differentials in return between Groups 2–3 and Groups 4–6 might or might not justify the increases in risk that are involved in stepping up from the very low-volatility groups to those at the average level.

Chart 1.4. Twenty Years of Results, Based on Volatility Group ...