Volatility is a word that has dissipated somewhat in recent months as coronavirus pandemic related worries have been stifled by central bank and fiscal stimulus measures.
That said, structural economic problems coming out of this pandemic could inspire more volatility on the horizon, and with a U.S. election taking its time ending, we could see turbulence take hold again in a similar way to what we saw in March.
For those worried about such a scenario, I'd recommend considering an Exchange Traded Fund (ETF) that has been designed to combat said volatility. The iShares MSCI minimum volatility US ETF (NYSE:USMV) is built on U.S. equities with lower volatility characteristics than the broader stock market.
This ETF has had 20% lower volatility than the S&P 500 over the past three- and five-year periods, providing investors with smoother returns over a long period of time.
For those who check their investment statements frequently and want to sleep better at night, lower volatility returns can help assuage short term fluctuations in one’s portfolio. This ETF carries a management expense ratio (MER) of only 0.15%, a tiny fraction of other actively managed funds or mutual funds offering similar portfolio goals.
Invest wisely, my friends.
