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.
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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