Skip to content
Subscriber Only

Market Swings Stressing You Out? These ETFs Promise to Be Chill

Exchange-traded funds designed to mute market volatility are seeing a big jump in assets
relates to Market Swings Stressing You Out? These ETFs Promise to Be Chill
Photographer: Tim Platt/Getty Images

A return to volatility in the stock market has investors jumping into financial products that promise a smoother ride. The steady increase in the size of daily swings in the Standard & Poor's 500-stock index since late November has sent $2 billion into exchange-traded funds designed to lessen volatility. That's a 15 percent rise in assets in the first five weeks of the year. And so far, the ETFs are all beating the markets they track.

These low-volatility ETFs are one of the most successful categories under the so-called smart-beta umbrella. "Smart beta" is the buzz phrase used to describe ETFs that screen or weight the stocks in their portfolios on such things as dividends, sales, or volatility. That veers from the standard practice of weighting a portfolio by market capitalization. There are 15 of these ETFs, with $16 billion in assets. The product didn't exist five years ago.