“Over the past 50 years, the least-volatile stocks have performed about as well as the market, but with far less risk,” according to Morningstar analyst Samuel Lee.
However, over short periods, low-volatility funds may underperform the broad indices during bull market rallies since low-volatility funds are exposed to more defensive sector picks.
“Investors should be willing to underperform during extended bull markets,” Lee added.
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Max Chen contributed to this article.