“Historically, stocks with low volatility have traded at a discount to stocks with high volatility,” Rawson added. “This makes sense because more-expensive and higher-growth stocks, such as technology or consumer discretionary stocks, tend to be more volatile than cheap, but slow-growth utilities or consumer staples.”
Investors who want to take a defensive tilt toward overseas exposure can also consider international low-volatility ETFs. The iShares MSCI EAFE Minimum Volatility ETF (NYSEArca: EFAV) and the PowerShares S&P International Developed Low Volatility Portfolio (NYSEArca: IDLV) both offer exposure to developed foreign markets. Additionally, the iShares MSCI Emerging Markets Minimum Volatility ETF (NYSEArca: EEMV) and PowerShares S&P Emerging Markets Low Volatility Portfolio (NYSEArca: EELV) provide exposure to low-volatility areas from the emerging markets. [Low-Volatility EM ETF Plays As Uncertainty Lingers]
For more information on low-volatility funds, visit our low-volatility category.
Max Chen contributed to this article.