If investors are worried about volatility these days, it’s because they should be. The CBOE Volatility Index or VIX for short is up over 50% this year, giving investors a heavy dose of market fluctuations.
Inflation fears capped of 2022 as threats of slowing growth put markets in a daze and lead to sell-offs, particularly in the technology sector. Then Russia’s invasion of Ukraine added to those worries as threats of nuclear warfare created more market uncertainty.
Investors have a number of options to address volatility. While there are hedging plays like safe haven assets in the form of bonds or gold, Invesco has low volatility exchange-traded funds (ETFs) that are also worth a look.
VIX data by YCharts
3 Different Flavors for 3 Market Caps
Whether it’s large, mid- or small cap exposure, investors can get low volatility strategies incorporated. For a low volatility strategy when purely trading the S&P 500, there’s the Invesco S&P 500 Low Volatility ETF (SPLV), which is based on the S&P 500® Low Volatility Index and seeks to invest at least 90% of its total assets in common stocks that comprise the Index.
The index is compiled, maintained, and calculated by Standard and Poor’s and consists of the 100 stocks from the SP 500 Index with the lowest realized volatility over the past 12 months. The fund comes with a low expense ratio of 0.25%.
For midcap equities exposure, there’s the Invesco S&P MidCap Low Volatility ETF (XMLV). The fund seeks to track the investment results of the S&P MidCap 400 Low Volatility Index.
Strictly in accordance with its procedures and mandated guidelines, the index provider selects for inclusion in the underlying index the 80 securities that it has determined have the lowest volatility over the past 12 months out of the 400 medium-capitalization securities that are contained in the S&P MidCap 400 Index.
Lastly, small caps can be the most volatile, which means protection is almost imperative. As such, there’s the Invesco S&P SmallCap Low Volatility ETF (XSLV) that seeks to track the investment results of the S&P SmallCap 600 Low Volatility Index.
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