With the equity markets dipping into a bear market and yields at record lows after a rally in the bond market, investors may think about re-positioning into stock exchange traded funds at these cheaper price points.
“I think it is natural to look at places to re-enter the equity market or take some money you had in the sidelines back to work. So, the question is how do you want to do that?” Dave Nadig, Chief Investment Officer and Director of Research of ETF Trends and ETF Database, said on Yahoo! Finance.
Nadig highlighted low-volatility ETF strategies, notably the iShares Edge MSCI Minimum Volatility USA ETF (USMV).
USMV tries to reflect the performance of the MSCI USA Minimum Volatility (USD) Index, which measures the performance of large and mid-capitalization equity securities listed on stock exchanges in the U.S. that, in the aggregate, have lower volatility relative to the large- and mid-cap U.S. equity market.
Something like the iShares Edge MSCI Minimum Volatility should help investors participate in any upside potential once the markets begin to rebound, but the ETF should also limit further downside risks or limit any more steep drawdowns in case the markets should grow more volatile.
USMV has helped investors reduce drawdowns and participate in the upside, producing improved risk-adjusted returns over the long haul.
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