Investors are buying ETFs that follow specialized low-volatility benchmarks at a much faster pace so far this year as they hunt for funds that provide exposure to stocks but with less risk.
“’Min Vol’ strategies are ‘the new black’ for many in the industry – products which hold their relevance through a market cycle,” ConvergEx Group market strategists said in a note Tuesday.
“While there are many quantitative methods to dampen portfolio volatility, the two most widely used among ETF sponsors are dividend-focused funds and those products that choose investments based on historical price volatility,” they said. [Low-Volatility ETFs Under the Microscope]
Dividend ETFs have pulled in close to $4 billion so far in 2013, compared with $9 billion of inflows the entire past year.
Meanwhile, funds which focus on stocks with less price volatility have gathered $1.5 billion year to date as compared to the $4.6 billion in new capital over the past year, according to ConvergEx.