Amid a turbulent start to 2016 for equities, investors looking to maintain long equity exposure are embracing low volatility exchange traded funds, such as the PowerShares S&P 500 Low Volatility Portfolio (NYSEArca: SPLV) and the iShares MSCI USA Minimum Volatility ETF (NYSEArca: USMV).

Investors are being rewarded for the faith they are showing low volatility ETFs as SPLV and USMV are outpacing the S&P 500 on a year-to-date basis. Investors who still want a foot in the markets but are wary of further wild swings can use low-volatility ETFs that track equities and dampen swings. Due to their investment style, low-volatility stocks have also historically delivered better risk-adjusted returns than more aggressive and volatile picks.

Extensive research has gone over the so-called low-volatility anomaly. As a more conservative strategy, low-volatility investments are expected to provide investors with smaller swings and more boring returns. However, the strategy has historically outperformed with higher risk-adjusted returns.

“About $2.3 billion has flowed into these ETFs so far this year—a minor miracle, considering that equity ETFs as a whole have seen $23 billion flow out. The bulk of the new money has gone into the $8.1 billion iShares MSCI USA Minimum Volatility ETF (USMV), which aims to be a more sedate version of a U.S. large-cap stock index. The PowerShares S&P 500 Low Volatility Portfolio (SPLV), which simply holds the 100 least-volatile stocks in the Standard & Poor’s 500-stock index, has seen $120 million come in to boost assets to $5.5 billion,” reports Eric Balchunas for Bloomberg.

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