Investors are flocking to funds that tout their ability to shelter investors from major market swings even though they didn’t perform exactly as advertised during the height of the Covid-19 pandemic.
Roughly $6.5 billion has poured into low-volatility mutual 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 a smoother market ride by holding stocks with the smallest one-day swings—higher or lower. That bias often lends itself to shares of utilities, consumer-goods and real-estate companies that tend to be less sensitive to economic booms and busts.
