Notice that this question does not involve lump sum investing.
Since it is hard to come across someone/a website selling funds/stocks/... who does not tell you about dollar cost averaging, I wondered how big the effect is/whether it would be beneficial to take to take the fund with the higher volatility when investing regularly for the next 10 years when both have the same return but a different volatility. When searching about 99% of the results were just marketing without or only artificial numbers. From the remaining most websites used something like Monte Carlo and showed that a higher volatility resulted in lower results and one showed about 0,5-1% higher results when using historical data compared to steady increase with 0 volatility (I sadly can't find this one again). If those using Monte Carlo were right, it would mean, that dollar cost averaging would have a negative effect contrary to the claims of the sales people. But I also heard that Monte Carlo often produced different results than real world data because it doesn't include things like mean reversion. For the website using historical data it could be the result of survival bias, selection bias, limited data, ... . As I am not a professional financial expert I don't know which is more realistic if anyone and what pitfalls to watch out for. Therefore I would be happy to gain knowledge from people better than me.
Example for better understanding:
Let us assume there are 2 funds A and B (or stock or similar) that are identical, especially for the return, but have different volatility and I would make regular investments into it like 100€ per month. Here with the special case with A having no volatility, only a steady increase.
|Shareprice of A
|number of shares of A
|Shareprice of B
|number of shares of B
Final value of shares of A: 771,561
Final value of shares of B: 776,881
With these made up numbers B would have been better although both had an average return of 10%.
Would a higher or lower volatility be better under a realistic circumstances for dollar cost averaging (using metrics like median)? (If the answer uses historical data and uses suspicious start-/endpoints like February to April 2020 it should provide the reason for this to remove the doubt of fudging the numbers)
Bonus question: How much would be the difference and does it differ when talking about average past returns or expected future returns?