Low volatility funds are back in fashion after battling the pandemic

Investors are flocking to funds that tout their ability to shield investors from major market swings, even if they didn’t perform exactly as advertised at the height of the Covid-19 pandemic.

About $6.5 billion has poured into low-volatility mutual funds and exchange-traded funds this year, putting the funds on track for their first annual inflows since 2019, according to Morningstar Direct. Low volatility funds promise smoother market movement by holding stocks with the smallest day-to-day swings, up or down. This bias often lends itself to stocks of utilities, consumer goods and real estate companies which tend to be less sensitive to economic booms and busts.


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