Low-Volatility Funds Are Back in Vogue After Struggling in Pandemic

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.

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