Is low volatility a crowded trade?

Recent commentaries have raised concerns about crowded trades that could adversely affect smart-beta strategies. The main argument is that investors have been ‘chasing performance’ by investing more into expensive factors like low volatility and that a sharp reversal of this trend (mean reversion) is likely to hurt portfolios. We, at State Street Global Advisors, think some aspects of this argument may be overstated.   First, let’s examine the premise of the above argument. It is …