Preprint Article Version 1 This version is not peer-reviewed

Why You Should Prefer Low Volatility ETFs

Version 1 : Received: 22 April 2017 / Approved: 25 April 2017 / Online: 25 April 2017 (10:57:21 CEST)

How to cite: Cohen, G. Why You Should Prefer Low Volatility ETFs. Preprints 2017, 2017040158 (doi: 10.20944/preprints201704.0158.v1). Cohen, G. Why You Should Prefer Low Volatility ETFs. Preprints 2017, 2017040158 (doi: 10.20944/preprints201704.0158.v1).

Abstract

Low volatility ETFs have become popular in recent year because investors are starting to understand the advantages involved in investing in those ETFs compared to traditional index investment. In this research I have examined the performance of six popular low volatility ETFs, four of them invest in U.S stocks and the other two invest in other developed and emerging markets. Results have pointed out that not only five of the low volatility ETFs have exposed their investors to lower risk, four of them have also produced higher returns. The advantage of investing in low volatility ETFs is prominent in the U.S stock market. All three sizes of stocks categories (Large, Mid and Small Capitalization) low volatility ETFs have outperformed their indexes bench marks in terms of risk and returns. For the non U.S stock investing, while no advantage have been found for investing in low volatility ETFs for developed countries, significant lower risk was found for emerging markets.

Subject Areas

low volatility; ETFS; anomaly

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