Being a reasonably priced growth index is all well and good, but does the Barron’s 400 soar and plunge so drastically that it gives you whiplash?   In a word, no. The Barron’s 400 fluctuates only moderately more than the overall market. That’s saying something, since the Barron’s 400 is equally weighted and therefore gives more weight to smaller, more volatile stocks than a market-capitalization-weighted index.    Compared to the S&P 500, the Barron’s 400 has a “beta” of 1.1. That means for every point the broader index moves up or down, our index shifts about 10% more. Given that the S&P 500 has a market-cap weighting structure, the extra volatility of the Barron’s 400 is incidental. However, it does help explain why the Barron’s 400 tends to outperform.   Below is a sector-by-sector volatility comparison of the Barron’s 400 to the universe from which it is selected. In addition to beta, the table shows standard deviation, which is a ratio of each sector’s range of price volatility—both up and down—to its average volatility. As with beta, the higher the number the greater the volatility.

This table prompts three observations:

• The Barron’s 400 tends to outperform, and therefore the volatility readings will be higher. Our index has risen 28.0% in the 12 months ended yesterday, compared to 22.2% for the Dow Jones U.S. Total Stock Market Index, which includes all exchange-listed U.S. stocks.
   
• In terms of beta, the Barron’s 400 is less than 10 basis points more volatile than the universe in six of the nine sectors—and technology components are less volatile.
   
• Consumer staples and health care have lower betas than the universe, which is why they are known as “defensive” sectors. Utilities usually are included in this group, but the Barron’s 400 has only one utility and is therefore not representative.

Conclusion: For a growth-stock index, the Barron’s 400 doesn’t have a volatility issue.