Low-Volatility ETFs Are a Sign of the Times

While it is intriguing to see "Low-Volatility ETFs" garner a chunk of the upside of broad market benchmarks, it is critical to understand where we are in a fear-greed cycle. Specifically, the events of 2008 as well as the subsequent crises (e.g., European debt, "Taxmageddon," etc.) lead money managers as well as individuals toward less risky watering holes. And that's fine -- for now.

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On the other hand, one would be wise to recognize that yield-oriented ETFs and low-volatility ETFs are not "buy-and-forget" solutions. Rising interest rates could hurt the former and the latter, to the extent the latter is heavily exposed to utility stocks. Most importantly, where the investment community sits on the fear-greed continuum will affect both the types of concepts that ETF marketers may hype as well as the performance of those ETFs themselves.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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Disclosure Statement: ETF Expert is a website that makes the world of ETFs easier to understand. Gary Gordon, Pacific Park Financial and/or its clients may hold positions in ETFs, mutual funds and investment assets mentioned. The commentary does not constitute individualized investment advice. The opinions offered are not personalized recommendations to buy, sell or hold securities. At times, issuers of exchange-traded products compensate Pacific Park Financial or its subsidiaries for advertising at the ETF Expert website. ETF Expert content is created independently of any advertising relationships. You may review additional ETF Expert at the site.

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