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High Returns from Low Risk: A Remarkable Stock Market Paradox


'Pim has been a pioneer in turning academic insights on the low-risk equity anomaly into a multi-billion investment portfolio. This book presents his magnum opus in a clear and powerful way. It's definitely a worthy read.'' —Gerben de Zwart, Head of Quantitative Equities, APG Asset Management, The Netherlands


For generations, investors have believed that risk and return are inseparable. But is this really true? In High Returns from Low Risk, Pim van Vliet, Founder and fund manager of the multi-billion dollar Conservative Equity funds at Robeco and expert in the field of low-risk investing, combines the latest research with stock market data going back to 1929 to prove that investing in low-risk stocks gives surprisingly high returns, significantly better than those generated by high-risk stocks.

Together with investment specialist Jan de Koning, he presents this counterintuitive story as a modern upbeat stock market equivalent of 'the tortoise and the hare'. This book helps you to construct your own low-risk portfolio, select the right ETF, or find an active low-risk fund in order to profit from this paradox. It also explains why investing in low-risk stocks works and will continue to work, even once more people become aware of the paradox. It's also a personal story, one that links our human nature and behavior to a prudent and successful investment formula. High Returns from Low Risk provides all the tools one needs to achieve excellent, long-term investment results.

'I loved reading this book. It's educational, humble, funny and philosophical; quite rare attributes for a financial book. In today's world, where individuals will have to take more and more responsibility for their savings, this book serves a need: providing sound and pragmatic advice about how to manage one's savings. Furthermore, this book puts forward an inconvenient truth about investment that is close to my heart: more risk doesn't necessarily mean more return. On the contrary, it is sound and proactive risk management that permits investment portfolios to have sustainable long-term returns.'
—Fiona Frick, CEO, Unigestion, Switzerland

'Explaining a financial theory to a broad audience is no easy task, and refuting one of the oldest and best known investment theories—higher risk for higher returns—harder still. But Pim (and Jan) manage to convince the reader in this easy-to-read and accessible book of their approach. They not only explain low-risk investing, but offer readers a whole set of investment (and even life) lessons at the same time. I would recommend that every investor read this book. It may not turn all readers into low-risk investors, but it certainly will offer valuable insights into the risk/return question.'
—Ronald van Genderen, CFA, Manager Research Analyst at Morningstar, The Netherlands

PIM VAN VLIET, PHD, is the Founder and fund manager of the multi-billion dollar Conservative Equity funds at Robeco. These low-risk funds are based on academic research and provide investors with a stable source of income from the stock market. Pim is a guest lecturer at several universities, the author of numerous financial publications and travels the world advocating low-volatility investing.

JAN DE KONING, CFA, CAIA, CMT is an investment specialist for Robeco's quantitative equities strategies and conducts client and consultant meetings, speaks at conferences, and gives seminars on low-volatility investing. In the past, he published regular investment updates and was an investment advisor, portfolio manager and fiduciary manager for institutional investors.

Introduction 1

Chapter One The Opposite of What You’re Aiming For 5

Chapter Two Mr Thrifty Enters the Stock Market 11

Chapter Three The Tortoise Beats the Hare 19

Chapter Four A Little Bit Is Enough 29

Chapter Five Ignoring the Eighth Wonder of the World 35

Chapter Six It’s All a Matter of Perspective 43

Chapter Seven The Dark Appeal of Risk 53

Chapter Eight Buy Them Cheap and Remember the Trend Is Your Friend 59

Chapter Nine All Good Things Come in Threes 67

Chapter Ten Spotting Tortoises and Hares 77

Chapter Eleven Slice and Dice, But Do It Wisely 83

Chapter Twelve Sit Back and Relax 91

Chapter Thirteen Trade Little, Be Patient 101

Chapter Fourteen The Biggest Victory of All 109

Chapter Fifteen The Golden Rule 117

Chapter Sixteen The Paradox Is Everywhere 123

Chapter Seventeen Will the Paradox Persist? 129

Chapter Eighteen Final Reflections 133

Epilogue Jan’s Perspective 137

Appendix 143

Acknowledgments 145

References 147

Index 151