Not All Low-Volatility ETFs Are Created Equal
These funds look to cut back on risk, but differences in processes make some funds more appealing than others.
Dan Sotiroff: Low-volatility strategies have been among the more recent additions to strategic-beta lineups over the past few years. These funds attempt to cut back on risk and can be solid long-term investments. But differences in processes make certain strategies more appealing than others.
Invesco S&P International Developed Low Volatility ETF is one low-volatility option in the foreign large-blend category. It holds the 200 least volatile stocks from the S&P Developed ex-U.S. Broad Market Index and weights them by the inverse of their volatility. It cuts back on risk, but it does not control its country or sector weights, so it can aggressively tilt toward certain segments of the market.
Daniel Sotiroff does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.