Digging into Lower Volatility Large-Cap Funds

USMV rose 19% in 2017, ahead of SPLV, but still behind SPY. The iShares ETF also has a lower annualized three-year standard deviation of 8.53, but a beta of 0.67, highlighting the importance of understanding the distinctions of these two similar sounding ETFs and the broader market.

USMV and SPLV combined have $21 billion in assets and each earns favorably low risk considerations and cost factors from CFRA based on our holdings and fund-level analysis. Their success in gathering assets has also encouraged other assets managers to offer low or minimum volatility ETF products in recent years.

For example, Fidelity Low Volatility (FDLO), JPMorgan US Minimum Volatility (JMIN) and Oppenheimer Russell 1000 Low Volatility Factor (OVOL) came to market since late 2016 and are rated by CFRA, but they do not have a three-year standard deviation.

The average large-cap core mutual fund CFRA rates had a three-year standard deviation of 10.18, in line with the 10.21 for SPY. Yet, using MarketScope Advisor and focusing on the funds with the lowest three-year standard deviation metric, investors can find some appealing, lower risk funds for consideration.