With Higher Volatility Ahead It’s Best to Short High Beta Stocks

Investors that went long low-beta stocks while shorting high-beta ones have done well in 2015 even as the S&P 500 essentially remained flat. Harindra de Silva, president at Analytic Investors, expects the strategy to win again in the coming year. 'My expectation is that this volatility is going to continue so I think a strategy such as this will continue to do well next year,' said de Silva. De Silva and Analytic Investors sub-advise on the 361 Global Long/Short Equity Fund (AGAZX), which is up almost 8% so far this year, according to fund-tracker Morningstar. The fund has outperformed 95% of its peers in Morningstar’s Long/Short category. De Silva said the primary sectors he is currently long in the fund are consumer discretionary, healthcare and technology. He said those spaces will likely remain low-beta and will continue to have a 'much more consistent performance than those we are short.' As for the sectors he is betting against, those include energy, telecom and materials.

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