ETF Specialist

Reduce Risk With This Low-Volatility ETF

Alex Bryan, CFA

It's easy to feel comfortable with risk in the midst of a nine-year bull market, only to regret it when the good times end. If you've bitten off more risk than you can chew, a more conservative asset allocation or defensive equity fund can help. Defensive equity funds still carry equity risk, but they should hold up better than the market during downturns. Among these,  iShares Edge MSCI Minimum Volatility USA ETF (USMV) is one of the best.

This is a well-crafted strategy that takes a holistic approach to reduce volatility and preserve diversification. And it only charges 0.15%. It should offer a smoother ride and a better risk/reward profile than most of its peers in the large-blend Morningstar Category. But it has not yet been tested in a major market downturn, so it earns a Morningstar Analyst Rating of Silver.

Alex Bryan, CFA has a position in the following securities mentioned above: USMV. Find out about Morningstar's editorial policies.