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Opt for Minimum Volatility ETFs Amid Latest Covid-19 Worries
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Wall Street seems to be taking a hit from the rising number of new coronavirus cases and implementation of lockdown measures to control the outbreak. Highlighting investors’ concerns about the resurgence, the Dow Jones Industrial Average declined 0.9% on Mar 23. Also, the S&P 500 and the Nasdaq were also down 0.8% and 1.1%, respectively, on the same day. If this was not enough, small-cap index Russell 2000 lost 3.6%, witnessing its worst day since June 2020. In fact, oil prices also declined more than 6% amid fears of a third wave of coronavirus outbreak.
Notably, sectors like travel, industrial, materials and retail faced the maximum pressure as the rise in new coronavirus cases is leading to new lockdowns globally. The highly contagious variants are appearing to be a probable reason behind the fresh cases. In order to combat the outbreak, Germany has extended the lockdown until Apr 18 while majority of France is also under lockdown, per a CNBC article.
Commenting on the current condition, Brad McMillan, chief investment officer at Commonwealth Financial Network has said that “despite the vast improvements, the third pandemic wave left large parts of the population vulnerable both medically and economically. That damage will take time to heal. Vaccinations will get that spread under control, but it will take time,” as quoted in a CNBC article.
The United States is also seeing a rise in coronavirus cases despite of the accelerated vaccine rollout programs. Several health officials are also warning the states against reopening too soon. The contagious U.K. variant currently makes up for about 30% of the coronavirus cases in the United States, per a CNBC article. Going by the same article, there are chances of the variant becoming dominant by the end of this month or early April.
According to a CNN report, Centers for Disease Control and Prevention Director Dr. Rochelle Walensky has also said that "the continued relaxation of prevention measures while cases are still high and while concerning variants are spreading rapidly throughout the United States is a serious threat to the progress we have made as a nation."
Low-Volatility ETFs to the Rescue
Low-volatility products could be intriguing choices for those who want to continue investing in equities in the turbulent market conditions. Consider the following interesting options:
This fund offers exposure to 185 U.S. stocks with lower volatility characteristics than the broader U.S. equity market by tracking the MSCI USA Minimum Volatility Index. With AUM of $28.15 billion, the product charges 0.15% in expense ratio (read: Filling March Madness in "Sweet 16" Brackets of ETFs).
This ETF provides exposure to stocks with the lowest realized volatility over the past 12 months. The fund is based on the S&P 500Low Volatility Index and holds 102 securities in its basket. It has AUM of $7.62 billion and charges expense ratio of 25 basis points (bps), as stated in the prospectus (read: American Century Investments Launches Low Volatility ETF (LVOL)).
EFAV looks to replicate the performance of international equity securities that have lower risk. The fund tracks the MSCI EAFE Minimum Volatility (USD) Index and holds 257 securities. It accumulated $9.51 billion in its asset base. EFAV charges 20 bps in annual fees (read: Defensive ETF Strategies to Sail Through Soaring COVID-19 Cases).
The fund provides exposure to global stocks with potentially less risk. The fund tracks the MSCI All Country World Minimum Volatility Index and holds 380 securities. It has AUM of $5.15 billion and charges 20 bps in annual fees.
The fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the S&P 500 Low Volatility High Dividend Index. It holds 52 securities. The fund has AUM of $2.87 billion and charges 30 bps in annual fees (read: Citi Foresees a 10% Stock Pullback Likely: ETFs to Save You).
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Opt for Minimum Volatility ETFs Amid Latest Covid-19 Worries
Wall Street seems to be taking a hit from the rising number of new coronavirus cases and implementation of lockdown measures to control the outbreak. Highlighting investors’ concerns about the resurgence, the Dow Jones Industrial Average declined 0.9% on Mar 23. Also, the S&P 500 and the Nasdaq were also down 0.8% and 1.1%, respectively, on the same day. If this was not enough, small-cap index Russell 2000 lost 3.6%, witnessing its worst day since June 2020. In fact, oil prices also declined more than 6% amid fears of a third wave of coronavirus outbreak.
Notably, sectors like travel, industrial, materials and retail faced the maximum pressure as the rise in new coronavirus cases is leading to new lockdowns globally. The highly contagious variants are appearing to be a probable reason behind the fresh cases. In order to combat the outbreak, Germany has extended the lockdown until Apr 18 while majority of France is also under lockdown, per a CNBC article.
Commenting on the current condition, Brad McMillan, chief investment officer at Commonwealth Financial Network has said that “despite the vast improvements, the third pandemic wave left large parts of the population vulnerable both medically and economically. That damage will take time to heal. Vaccinations will get that spread under control, but it will take time,” as quoted in a CNBC article.
The United States is also seeing a rise in coronavirus cases despite of the accelerated vaccine rollout programs. Several health officials are also warning the states against reopening too soon. The contagious U.K. variant currently makes up for about 30% of the coronavirus cases in the United States, per a CNBC article. Going by the same article, there are chances of the variant becoming dominant by the end of this month or early April.
According to a CNN report, Centers for Disease Control and Prevention Director Dr. Rochelle Walensky has also said that "the continued relaxation of prevention measures while cases are still high and while concerning variants are spreading rapidly throughout the United States is a serious threat to the progress we have made as a nation."
Low-Volatility ETFs to the Rescue
Low-volatility products could be intriguing choices for those who want to continue investing in equities in the turbulent market conditions. Consider the following interesting options:
iShares MSCI USA Min Vol Factor ETF (USMV - Free Report)
This fund offers exposure to 185 U.S. stocks with lower volatility characteristics than the broader U.S. equity market by tracking the MSCI USA Minimum Volatility Index. With AUM of $28.15 billion, the product charges 0.15% in expense ratio (read: Filling March Madness in "Sweet 16" Brackets of ETFs).
Invesco S&P 500 Low Volatility ETF (SPLV - Free Report)
This ETF provides exposure to stocks with the lowest realized volatility over the past 12 months. The fund is based on the S&P 500Low Volatility Index and holds 102 securities in its basket. It has AUM of $7.62 billion and charges expense ratio of 25 basis points (bps), as stated in the prospectus (read: American Century Investments Launches Low Volatility ETF (LVOL)).
iShares MSCI EAFE Min Vol Factor ETF (EFAV - Free Report)
EFAV looks to replicate the performance of international equity securities that have lower risk. The fund tracks the MSCI EAFE Minimum Volatility (USD) Index and holds 257 securities. It accumulated $9.51 billion in its asset base. EFAV charges 20 bps in annual fees (read: Defensive ETF Strategies to Sail Through Soaring COVID-19 Cases).
iShares MSCI Global Min Vol Factor ETF (ACWV - Free Report)
The fund provides exposure to global stocks with potentially less risk. The fund tracks the MSCI All Country World Minimum Volatility Index and holds 380 securities. It has AUM of $5.15 billion and charges 20 bps in annual fees.
Invesco S&P 500 High Dividend Low Volatility ETF (SPHD - Free Report)
The fund seeks investment results that generally correspond (before fees and expenses) to the price and yield of the S&P 500 Low Volatility High Dividend Index. It holds 52 securities. The fund has AUM of $2.87 billion and charges 30 bps in annual fees (read: Citi Foresees a 10% Stock Pullback Likely: ETFs to Save You).
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>