Low volatility exchange-traded funds (ETFs) could be becoming an afterthought for many investors, as volatility continually probes new lows. Data suggests investors have been pulling money from popular U.S.-focused low volatility ETFs, as the CBOE Volatility Index, also known as the VIX, has recently been touching record lows.
While investors have recently been yanking money from low vol ETFs, such as the iShares Edge MSCI Min Vol USA ETF (NYSEARCA:USMV) and the PowerShares S&P 500 Low Volatility Portfolio (NYSEARCA:SPLV), these and other low-volatility ETFs have been surging. In fact, SPLV and USMV are keeping pace with the S&P 500 year-to-date and both of the low volatility ETFs have recently hit all-time highs.
The recent ascent of low volatility ETFs is perhaps surprising because, well, volatility is low and low volatility strategies are designed to perform less poorly on the downside, not necessarily deliver out-performance as stocks soar.
USMV and SPLV are the kings of low volatility funds dedicated to U.S. stocks, but investors have some other compelling options when it comes ETFs that offer volatility reduction strategies. Consider some of the following low volatility ETFs.