The market has been nothing if not highly volatile this year.
The CBOE Volatility index (VIX), also known as the stock market's fear gauge, started the year at a low level around 14. It spiked to near 30 (extreme fear territory) after the war in the Middle East began, and it remains around 24 today, a level that signals increasing uncertainty and fear. Similarly, CNN's Fear & Greed Index is solidly in the "Extreme Fear" range.
When the market whipsaws, as it has been doing in March, many investors seek ways to reduce volatility in their own portfolios. If you're among them, there are a couple of exchange-traded funds (ETFs) you should consider.
Several ETFs can reduce volatility
The first is the iShares MSCI USA Min Vol Factor ETF (USMV 0.50%).
NYSEMKT: USMV
Key Data Points
This ETF tracks U.S. stocks with low volatility relative to the broader market. It currently holds 170 different stocks, with no stock accounting for more than about 1.6% of the fund, so it's highly diversified. Its two largest holdings are Motorola Solutions and ExxonMobil, and the fund's stocks are concentrated in the technology, financial services, healthcare, and consumer defensive sectors.
The fund has a management fee of 0.15%, which is significantly lower than the average ETF management fee.
The other ETF worth looking at is the Invesco S&P 500 Low Volatility ETF (SPLV 0.47%), which consists of the 100 or so S&P 500 index securities with the lowest realized volatility over the past 12 months.
NYSEMKT: SPLV
Key Data Points
The fund currently holds 103 different stocks, though none exceeds 1.4% of overall holdings. Its two largest holdings are CenterPoint Energy and The Southern Company. Its securities are concentrated in the utilities, financial services, real estate, and consumer defensive sectors. The fund tends to avoid more volatile sectors, such as technology, and leans toward defensive sectors.
SPLV carries a slightly higher management fee, of 0.25%, though that's still below average for an ETF.
Image source: Getty Images.
SPLV is up about 1.4% year to date, while USMV is down about 2.1% this year. Compare that to the broader S&P 500, which is down about 4.2% for 2026. Each ETF is less volatile than the market and should remain that way going forward. Investing in these low-volatility funds just might let you sleep a bit easier at night in such volatile times.
