Conservative Formula Investing

It is designed to achieve higher risk-adjusted returns in a systematic manner, by giving investors exposure to multiple investment factors using easily obtainable data.

The formula is outlined in a book 'High Returns from Low Risk' which is written by Pim van Vliet and Jan de Koning.

[7][8][9][10][11] It has also been empirically tested in an academic paper by David Blitz and Pim van Vliet which is publicly available on SSRN.

[16][17][18][19][7] Based on a universe of US stocks, the Conservative Formula has produced an annualized return of 15.1% over the period January 1929 to December 2016, significantly outperforming the US market index by 5.8% per year.

[14] In India, it significantly outperformed the S&P BSE 100 Index by 12.6% per annum over the period September 2006 to June 2022, also with lower volatility.

The study finds that all four formulas generate significant raw and risk-adjusted returns, primarily by providing efficient exposure to well-established style factors.