Chris Dillow 

Why defensives outperform

Chris Dillow

Chris Dillow
Why defensives outperform

For stockpickers, risk does not necessarily pay. My chart below shows this. It plots price changes for the main FTSE sectors in the last five years against the volatility of their monthly changes in the previous five years. It’s clear that there’s no significant relationship between the two. Yes, you’d have done well if you’d bought into the high-risk IT sector five years ago. But high-risk mining has done poorly, while the low-risk beverages sector has done well, thanks in large part to Diageo.

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