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Best Low-Volatility ETFs for This Circus of a Market

Barchart·11/05/2026 12:44:39

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Earnings-season implosions and a shocking blowout at the polls have the market on edge, putting low-volatility and minimum-volatility exchange-traded funds (ETFs) back into the spotlight.

Investors love to hide in low-vol ETFs and min-vol products when the stock market gets choppy, and there's little question as to why. Any time stocks start to shiver a little bit, the financial media begins flooding the zone with some choice words. You'll hear "correction" (a 10%-plus drop) if things are bad, or "bear market" (a 20%-plus drop) if things really start to deteriorate. But more than anything, you'll hear "volatility."

Volatility is simply a measurement of an asset's up and down moves. And when people start talking about stock market volatility, it's usually because volatility is high—a poor environment for most equities.

Let me introduce you to some of the best low- and minimum-volatility ETFs you can buy for a rocky market. But first, I'll teach you a little bit about volatility, its connection to down markets, and how these funds attempt to chill your portfolio out.

Disclaimer: This article does not constitute individualized investment advice. Individual securities, funds, and/or other investments appear for your consideration and not as personalized investment recommendations. Act at your own discretion.

Watch Out for High Volatility

When people say the market "is volatile," what they typically mean is that the market "is highly volatile." In other words, stocks are moving up and down rapidly.

And that—high volatility—is when things tend to turn sour for stocks.

We'll get to more scientific ways to measure stock market volatility in a moment. But as a general rule, if stocks spend a prolonged time moving up and down by more than 1% per day, your average market watcher would likely tell you that stocks are volatile.

That doesn't sound so bad in a bubble. Stocks could theoretically go down 1%, then up 3%, then down 1%, then up 3%, and hey, you'd have some nice gains in a volatile market. But that's rarely how it plays out in practice.

Crestmont Research evaluated S&P 500 Index data from 1962 through the end of 2025, measuring performance across four different quartiles of annual volatility. Here's a look at a few stats from each quartile (volatility range in parentheses):

1st Quartile (0%-1.0%): 94% chance of an up year, 18.2% average gain in up years, 1.5% average loss in down years, expected gain of 17.0%
2nd Quartile (1.0%-1.4%): 75% chance of an up year, 14.6% average gain in up years, 6.3% average loss in down years, expected gain of 9.4%
3rd Quartile (1.4%-1.7%): 88% chance of an up year, 17.3% average gain in up years, 5.9% average loss in down years, expected gain of 14.4%
4th Quartile (1.7%-2.7%): 38% chance of an up year, 15.1% average gain in up years, 18.6% average loss in down years, expected loss of 5.9%

It's not a perfect line. But broadly speaking, years with low volatility were more likely to be positive (and when they weren't, the damage was relatively more contained) than years with high volatility. Up years could be more productive during periods of relatively high volatility, but they were less productive when the markets were extremely volatile.

Why? The oversimplified but directionally correct answer is "markets hate uncertainty." Big swings up and down are an indication that investors aren't all on the same page about where stocks and other investments should be priced. It's also a risky environment in which to invest—people get a little skittish about the possibility of buying something that could lose 3% or 4% the very next day!

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What Are Low-Volatility ETFs?

Low-volatility ETFs hold the lowest-volatility stocks within a selection universe. For instance, an S&P 500 low-vol ETF would try to hold the lowest-volatility stocks in the S&P 500, based on, say, beta or standard deviation (two common measures of volatility).
There are numerous twists on this, of course: low-vol ETFs focus on stocks of varying sizes, or stocks that pay high dividends, or stocks in other countries.
Minimum-volatility ETFs are similar to low-volatility ETFs in that they try to reduce volatility, but they go about it differently. Rather than holding the lowest-volatility stocks within their selection universe, min-vol funds try to create the lowest-volatility portfolio possible … even if doing so involves owning some volatile stocks.

How would that work? If you own several stocks that are volatile, but whose performances aren't really correlated with one another, they could balance each other out to an extent, creating a portfolio that overall doesn't exhibit much volatility.

The Best Low- and Minimum-Volatility ETFs You Can Buy

Hopefully, you know quite a bit more about volatility, as well as the logic behind low- and min-vol strategies, than you did a few minutes ago. And if you'd like to learn even more, I have a few more thoughts, which I'll share with you a little later.

Now that you have some knowledge to work with, let's take a look at a few of my picks from my larger review of the best low- and minimum-volatility ETFs you can buy.

Invesco S&P 500 Low Volatility ETF

Style: U.S. low-volatility large-cap stock
Assets under management: $7.6 billion
Dividend yield: 2.2%
Expense ratio: 0.25%, or $2.50 per year on every $1,000 invested

I'll start with one of the largest volatility-specific funds of any sort: the Invesco S&P 500 Low Volatility ETF (SPLV), which is currently responsible for more than $7 billion in assets under management (AUM).

This straightforward index fund tracks the S&P 500 Low Volatility Index, which starts with the S&P 500's components, narrows it down to the hundred components with the lowest realized volatility over the past 12 months, then "weights" each stock based on its lack of volatility. (Weighting refers to the percentage of fund assets invested in something, be it an asset, industry, sector, country, etc.)

Right now, this construction method has built a portfolio that's high on utilities (27%), financials (24%), real estate (16%), and industrials (13%). The utility sector's dominance over the past couple months has brought names such as WEC Energy Group (WEC) and Duke Energy (DUK) into the top holdings. However, the fund is also loaded with blue chips from across the market, including Dividend Kings Coca-Cola (KO) and Johnson & Johnson (JNJ).

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So, what about that low volatility? Let's look at beta, which is a common measure of volatility that compares an investment to a benchmark. For stocks, the benchmark is typically the S&P 500, and the benchmark is set at 1. A beta of less than 1 implies something is less volatile than the benchmark; a beta of more than 1 implies more volatility. SPLV has a beta of 0.30 right now, which implies that the ETF is less than half as volatile as the broader stock market.

That low volatility hasn't always worked out during downturns (see: the COVID bear market), but it usually has, especially during longer periods of market sluggishness.

For instance, during the 2022 bear market, Invesco S&P 500 Low Volatility only lost 15% compared to 24% for the S&P 500. It fared very well during 2025's near-bear market, declining by just about 6% between the Feb. 19 market high and April 8 market low, while the S&P 500 lost nearly 20%. And in 2026, SPLV outperformed the index, 4% to -4%, across a first quarter in which the S&P 500 was flat for the first two months before diving in March.

If you want straightforward protection tethered to the U.S. stock market, Invesco's fund is one of the best low-volatility ETFs you can buy.

State Street SPDR US Small Cap Low Volatility Index ETF

Style: Low-volatility U.S. small-cap stock
Assets under management: $259.3 million
Dividend yield: 2.3%
Expense ratio: 0.12%, or $1.20 per year on every $1,000 invested

Small-cap stocks are known for their relatively high volatility.

Fundamentally, it's not difficult to figure out why. Small caps are inherently riskier as a group—compared to their larger-cap counterparts, they typically have fewer and less diverse revenue streams, less capital on hand, less (and pricier) access to capital, and less institutional investment, which can help stabilize stock returns over time. Conversely, it's much easier to deliver high rates of growth, and the same nominal dollar amount of share purchases in a small cap will have a bigger impact on its stock price.

In other words: Volatility represents a double-edged sword for small caps. So what happens if you reduce that volatility?

A look at the State Street SPDR US Small Cap Low Volatility Index ETF (SMLV) can give us an answer. The SMLV's tracking index starts with a universe of stocks whose market caps rank between 1,001 and 3,000, then includes (and ranks) low-volatility stocks based on a five-year measurement of standard deviation. No stock can account for more than 5% of the index, nor more than 20 times the stock's weighting within the index universe.

State Street Asset Management's fund currently holds around 390 stocks. It allocates the greatest portions of its assets to the financial (32%), industrial (14%), and technology sectors (12%), while the defensive consumer staples and utility sectors account for less than 10% combined. While that might sound surprising, it's important to remember that:

The small-cap universe SMLV draws from is different from the S&P 500. For instance, consumer staples and utilities are among the smallest sectors in this universe. Compared to that universe, however, they're actually better-represented in SMLV.
A sector's defensive qualities might be different depending on company size and market periods. For instance, smaller regional banks have actually been less volatile than bigger financial firms over the trailing three and five years. But they've been more volatile longer-term.

The resulting portfolio produces a beta of 0.80. That's not only less volatile than the S&P 500, but it's considerably tamer than the small-cap Russell 2000 (which is a good comparison for SMLV), whose beta of 1.26 is much higher than the broader market.

What's most remarkable about SMLV is its performance. Yes, the Russell 2000 tends to provide more upside in roaring bull runs, while Small Cap Low Volatility Index does better during flat and down periods, as you'd expect. However, SMLV is generally competitive over most long-term time frames, and it has even beaten the Russell 2000 on a total-return basis (price plus dividends) over the trailing three- and five-year periods.

In short: At least so far, SMLV hasn't just been one of the best low-volatility ETFs to buy … it has been one of the best ways to buy small-cap stocks, too.

iShares MSCI EAFE Min Vol Factor ETF

Style: Developed-market low-volatility stock
Assets under management: $5.5 billion
Dividend yield: 3.0%
Expense ratio: 0.20%, or $2.00 per year on every $1,000 invested

We can apply low- and minimum-volatility strategies across the pond, too.

The iShares MSCI EAFE Min Vol Factor (EFAV), at more than $5 billion in assets under management, is the most popular way to get this kind of exposure. This is a min-vol strategy that attempts to provide exposure to developed-market stocks in the EAFE (Europe, Australia, and the Far East) with lower volatility compared to the MSCI EAFE Index.

Importantly, EFAV is still trying to give you exposure that's similar to MSCI EAFE, so it has certain restraints:

If a country has a weight of more than 2.5% in the MSCI EAFE, the MSCI EAFE Minimum Volatility Index won't deviate more than 5% in either direction from that weight.
If a country has a weight of less than 2.5%, its weight in the min-vol index will be capped at three times that weight.
Sector weights won't deviate from their weight in the MSCI EAFE by more than 5% in either direction.
No stock will be weighted at more than 1.5% or 20 times the stock's weight in the MSCI EAFE Index, whichever is lower.

This ETF's 265-component portfolio is most heavily weighted in Japanese stocks (28%), but it also has high concentrations of Swiss (11%), U.K. (10%), and French stocks (6%). Financials and industrials are top sector weights, but at lower percentages than in the plain MSCI EAFE Index. Healthcare, consumer staples, and utilities, meanwhile, enjoy greater weightings. And as is typical with a predominantly large-cap developed-market ETF, EFAV throws off a yield that's superior to the S&P 500, at 3% currently.

The iShares MSCI EAFE Min Vol Factor ETF is one of the best minimum-volatility ETFs you can buy for international exposure. Since inception in 2011, EFAV has delivered plenty of bear-market outperformance. Just know that it has the same difficulties with capturing upside in bull markets as its U.S. brethren; long-term returns don't quite match its volatility-indifferent brother, the iShares MSCI EAFE ETF (EFA).

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