The largest ETF in the low volatility category is the PowerShares S&P 500 Low Volatility Portfolio (NYSEArca: SPLV), with $1.54 billion in assets. It tracks 100 of the S&P 500’s stocks that have shown the lowest volatility over the last year. The fund is up 5.1% year-to-date, compared to the SPDR S&P 500 (NYSEArca: SPY) gain of 11.8% year-to-date. SPLV has a beta of 0.7.
Axioma, a risk-modeling firm behind the Russell 1000 Low Volatility ETF (NYSEArca: LVOL), argues that their product provides a more diversified market exposure and higher value for investors.
These types of investments appeal to investors as a long-term, buy-and-hold investment.
“Over the past 50 years, the least-volatile stocks have performed about as well as the market, but with far less risk,” Lee said.
For more information on market volatility, visit our volatility category.
Max Chen contributed to this article.
Story updated 5/3/2012 for factual correction.