Volatility Index ETFs: A Comprehensive Guide to Investment Options

Volatility Index ETFs can be a valuable tool for investors looking to manage risk and capitalize on market fluctuations. They track the price of volatility indexes, such as the VIX, which measures the expected volatility of the S&P 500.

The VIX, also known as the Fear Index, has been around since 2003 and is calculated using a complex formula that takes into account the prices of a range of options on the S&P 500. This makes it a widely recognized and respected benchmark for market volatility.

Investors can use Volatility Index ETFs to hedge their portfolios against potential losses, or to speculate on future market movements. By tracking the VIX, these ETFs provide a way to invest in the market's expected volatility, rather than the market itself.

Low-volatility ETFs can be a great way to access the stock market with a lower risk profile than the typical index fund.

They can reduce overall volatility over longer time periods, but still might suffer against sudden market shocks.

The data as of August 27 shows that these funds can be a good option for investors looking for additional peace of mind.

However, even the best low-volatility ETFs can carry the risk of underperformance, which might hold your portfolio back in the long run.

Excluding more dynamic companies from your portfolio can result in lower returns, but it might be worth it for the added security.

The trailing 12-month yield, a standard measure for equity funds, is a good indicator of a fund's dividend yield, which is currently represented by the data as of August 27.

If you're interested in investing in volatility index ETFs, there are a few options to consider. One option is the iShares MSCI Global Min Vol Factor ETF (ACWV), which has $4.4 billion in assets under management.

This ETF has a dividend yield of 2.3% and expenses of 0.20%. It holds about 400 large stocks that exhibit low-volatility characteristics, with half the holdings in the U.S. and the other half from foreign markets.

Here's a breakdown of some key holdings in the ACWV ETF:

The Invesco S&P 500 Low Volatility ETF is a popular choice among investors. Its assets under management are a whopping $7.5 billion.

This ETF offers a dividend yield of 2.2%, which is a decent return on investment. The expenses associated with this ETF are 0.25%, or $25 annually for every $10,000 invested.

The largest holding in this ETF is Warren Buffett's holding company Berkshire Hathaway, with a weighting of around 1.1% in the portfolio. Another top holding is soft drink maker Coca-Cola, with a similar weighting.

The top three holdings in this ETF are Berkshire Hathaway, Coca-Cola, and telecom titan T-Mobile US. The weightings for all the stocks in the SPLV portfolio are roughly between 1% and 1.4%.

The iShares MSCI Min Vol Global ETF offers a unique investment option for those looking to diversify their portfolio with a lower risk profile.

Assets under management for this ETF are around $4.4 billion.

This ETF holds about 400 large stocks that exhibit low-volatility characteristics, with half of the holdings in the U.S. and the other half from foreign markets.

The fund has risen to the occasion and outperformed the benchmark MSCI ACWI Index during turbulent markets.

Top low-volatility stocks in the portfolio include Big Pharma mainstay Merck and trash collection king Waste Management.

Here are the key statistics for the iShares MSCI Min Vol Global ETF:

The Invesco S&P 500 High Dividend ETF is a great option for those looking for a low-volatility investment with a high dividend yield.

It has $3.7 billion in assets under management, making it a substantial fund with a lot of resources behind it.

The ETF offers a dividend yield of 3.9%, which is higher than what you'd get from a 10-year Treasury bond.

One of the key features of this ETF is its focused investing approach, targeting the top 75 stocks in the S&P 500 with the highest dividend yields.

No more than 10 stocks from a single sector can be included in the fund, which helps to reduce volatility.

The fund narrows it down to the 50 or so stocks with the lowest volatility, resulting in a portfolio that's both high-yielding and low-risk.

Leading positions in the ETF include AT&T, Verizon Communications, and Altria Group, all of which are blue chip stocks with a strong history of dividends.

These stocks make up a significant portion of the fund's holdings, with AT&T and Verizon Communications both accounting for a substantial amount of the portfolio.

Here are some key statistics about the Invesco S&P 500 High Dividend ETF:

This ETF has a small list of holdings and a bias toward a handful of sectors, including utilities and consumer staples.

The Invesco S&P MidCap Low Volatility ETF is an interesting option for investors looking for a more tactical approach. It has $834.1 million in assets under management.

This ETF focuses on mid-cap stocks that are not too big and not too small, often referred to as "goldilocks" stocks. These companies have established their competitive positions in the marketplace and validated their products and distribution.

The Invesco S&P MidCap Low Volatility ETF has a dividend yield of 2.0% and expenses of 0.25%. It's a relatively low-cost option for investors.

The fund excludes the big guys and instead goes for the next tier of the market down from blue chip stocks. It's a focused list of about 80 solid mid-caps.

Current holdings include real estate investment trust NNN REIT and global IT security firm Science Applications International (SAIC). These companies are mostly under the $10 billion mark in overall market value.

Here's a quick rundown of the Invesco S&P MidCap Low Volatility ETF's key features:

If you're looking for a low-volatility ETF, the Invesco Quantitative Strategies Global Equity Low Volatility Low Carbon UCITS ETF Acc has a 1-year return of 24.14%.

The iShares Edge MSCI World Minimum Volatility UCITS ETF USD (Acc) and iShares Edge MSCI World Minimum Volatility UCITS ETF USD (Dist) have similar returns, with 1-year returns of 17.86% and 17.80% respectively.

The Xtrackers MSCI World Minimum Volatility UCITS ETF 1C has a 3-year return of 17.54%. This is slightly higher than the iShares Edge MSCI World Minimum Volatility UCITS ETF USD (Acc) and iShares Edge MSCI World Minimum Volatility UCITS ETF USD (Dist) 3-year returns of 17.36%.

The iShares Edge MSCI World Minimum Volatility ESG UCITS ETF (Acc) has a 3-year return of 17.85%, which is slightly higher than the Xtrackers MSCI World Minimum Volatility ESG UCITS ETF 1C 3-year return of 17.07%.

Here's a comparison of some key statistics for these ETFs:

The iShares MSCI Global Min Vol Factor ETF has assets under management of $4.4 billion, a dividend yield of 2.3%, and expenses of 0.20%.