Low-volatility ETFs provide investors the ability to track broad markets with some downside protection. The low-volatility strategy has a number of academic studies to support the rationale behind the investment idea, according to VIX and More, but it is better illustrated with a side-by-side comparison.
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The low-volatility factor investments work on the idea that they help cushion against market turns, limiting drawdowns that investors experience while providing upside potential. Consequently, the low- or min-vol strategies may produce better risk-adjusted returns over the long haul, which has been backed by extensive academic research.
Real estate, financial services and utilities stocks combine for about two-thirds of XMLV’s lineup. XMLV has outperformed the S&P MidCap 400 Index by almost 400 basis points since coming to market.
For more information on middle capitalization stocks, visit our mid-cap category.