You can’t completely avoid risk when investing in the stock market, but you can go to efforts to minimize it. And that can be a key goal for many investors, particularly those who are nearing retirement and who want to ensure that their capital is preserved, while still being able to grow their portfolios.
One way to minimize your risk is by investing in low-volatility stocks. These are the types of investments which aren’t likely to go on big swings in value and which can make for fairly stable long-term investments. An exchange-traded fund (ETF) that focuses on low-volatility stocks is the Vanguard U.S. Minimum Volatility ETF (CBOE:VFMV).
The fund offers investors a good mix of stocks as it invests in large, mid, and small-cap companies while also covering different sectors of the market. And its expense ratio of 0.13% also isn’t terribly high given the carefully selected investments it provides you with. There are 162 stocks within the fund and the largest holding only accounts for 1.5% of the portfolio’s overall weight; there is no single stock which will have a big impact on the fund’s overall performance. Some of the more notable names in the ETF include International Business Machines (NYSE:IBM), Lockheed Martin (NYSE:LMT), and T-Mobile US (NASDAQ:TMUS).
In the past 12 months, the fund has generated returns totaling 27%, which is a bit lower than the S&P 500’s gains of 35%. While you might achieve greater gains with mirroring the S&P 500, this fund can provide you with greater safety and stability amid more turbulent market conditions. For risk-averse investors, this can be a good ETF to diversify your portfolio with.