However, for ETF trading, our average returns are usually 5 to 10 % because ETFs are usually less
volatile than individual stocks.
Not exact matches
However, because they are comprised of a basket of actual
stocks, ETFs are generally much less
volatile than the
individual small to mid-cap growth
stocks we trade in bull markets.
Just as picking
individual stocks is fraught with risks, so too is picking
individual ETFs that may be much more concentrated and
volatile than SPY or AGG.
The comparison in Exhibit 4 demonstrates that not only do
individual stock strategies tend to be
volatile, but over the long term, a consistent approach (such as the S&P BSE SENSEX) can provide consistent returns that, in some cases can be better
than individual stock performance.
In fact I like to look at my portfolio's biggest winners and losers each month to remind myself just how
volatile individual stocks are (often up or down by more
than 20 % in a single month).