Low volatility ETFs look to cut investor risk

Article Excerpt

ETF managers employ various strategies to produce portfolios that have lower volatility, or risk, than the overall stock market. At the same time, they also aim to keep up with overall market gains despite the lower risk. Below we analyze three ETFs with lower volatility portfolios. Two of them employ direct techniques to lower volatility; the third picks its stocks exclusively from the low-volatility segment of consumer staples. See the supplement on page 100 for more information. ISHARES EDGE MSCI MIN VOL USA ETF $63.84 (New York symbol USMV; TSINetwork ETF Rating: Conservative; Market cap: $33.3 billion) provides investors with a portfolio that aims to deliver market-like returns but with lower volatility. It does this by holding some stocks with more volatility—but focuses on low volatility stocks overall. The ETF holds a portfolio of U.S. stocks. Its largest sector weighting are Information Technology (16.4%), Financials (14.2%), Consumer Staples (12.3%), Healthcare (10.7%), Consumer Discretionary (10.6%), Real Estate (8.6%) and Utilities (8.5%). The fund holds…