Related: 5 Quality ETFs to Help Smooth Out a Volatile Ride
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.
“A minimum volatility strategy may help investors feel comfortable investing in a riskier asset class, while also helping them to remain invested through more challenging market environments,” according to BlackRock.
For more on smart beta ETFs, visit our Smart Beta Channel.