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Low volatility investing is back in vogue since the market environment remains extremely challenging. As the global economic growth is slowing significantly and inflation is expected to remain high, we could see continued market turbulence.
Many investors have been pouring money into low and minimum volatility funds as they seek shelter from the wild swings in the market. These ETFs hold up relatively well during market declines but may underperform the broader indexes during strong bull markets.
The iShares Edge MSCI Min Vol U.S.A. ETF (USMV - Free Report) —the most popular fund in the space— selects and weights stocks to create a portfolio that has lower volatility relative to the broader market. Vertex Pharmaceuticals (VRTX - Free Report) and Waste Management (WM - Free Report) are its top holdings.
The Invesco S&P 500 Low Volatility ETF (SPLV - Free Report) holds 100 least-volatile stocks in the S&P 500 index. PepsiCo (PEP - Free Report) and Johnson & Johnson (JNJ - Free Report) are its top holdings.
The SPDR SSGA U.S. Large Cap Low Volatility Index ETF (LGLV - Free Report) selects least volatile stocks from the broader Russell 1000 Index. Hershey (HSY - Free Report) and McDonald's (MCD - Free Report) are among the top holdings.
These ETFs have significantly outperformed the broader indexes over the past year. To learn more, please watch the short video above.
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Why Low Volatility ETFs are Beating the Market
Low volatility investing is back in vogue since the market environment remains extremely challenging. As the global economic growth is slowing significantly and inflation is expected to remain high, we could see continued market turbulence.
Many investors have been pouring money into low and minimum volatility funds as they seek shelter from the wild swings in the market. These ETFs hold up relatively well during market declines but may underperform the broader indexes during strong bull markets.
The iShares Edge MSCI Min Vol U.S.A. ETF (USMV - Free Report) —the most popular fund in the space— selects and weights stocks to create a portfolio that has lower volatility relative to the broader market. Vertex Pharmaceuticals (VRTX - Free Report) and Waste Management (WM - Free Report) are its top holdings.
The Invesco S&P 500 Low Volatility ETF (SPLV - Free Report) holds 100 least-volatile stocks in the S&P 500 index. PepsiCo (PEP - Free Report) and Johnson & Johnson (JNJ - Free Report) are its top holdings.
The SPDR SSGA U.S. Large Cap Low Volatility Index ETF (LGLV - Free Report) selects least volatile stocks from the broader Russell 1000 Index. Hershey (HSY - Free Report) and McDonald's (MCD - Free Report) are among the top holdings.
These ETFs have significantly outperformed the broader indexes over the past year. To learn more, please watch the short video above.