The risk-return relationship of this newfound bear market has changed the opinions of many investors on the wisdom of investing in high growth, high volatility businesses - a strategy which has paid off handsomely in years past.
Sectors which many investors couldn't get enough of, including cryptocurrencies and cannabis producers, have seen marked declines in recent months amid a marketwide selloff which appears to be only just beginning.
The volatility with which many of these securities traded (frequent double-digit increases or declines on a daily basis) have begun to take their toll on the portfolios of many aggressive investors, as daily declines have begun to outpace positive days.
Investing in companies with significantly higher levels of volatility than peers certainly is quite understandably a less-favorable strategy in a market downturn.
For investors seeking low-volatility equities in this environment, a number of funds exist to provide exposure to a diversified basket of such companies. One of the best low-cost exchange traded funds (ETFs) in the low-volatility space is the iShares Edge MSCI Minimum Volatility USA ETF (USMV).
This fund has declined, along with the broader market, but is poised to provide better returns in a bear market than its peers, allowing investors to benefit from the future potential upside equity markets provide with lower risk relative to competing funds. At a management expense ratio of only 0.15%, investors pay next to nothing for access to this portfolio of stocks.
Invest wisely, my friends.
